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3 CONTENTS Directors, Officials & Registered Office 01 Board of Directors 02 Vision, Mission & Values 03 Statement of Directors Responsibilities 04 Chairman s Statement 05 Executive Management 09 Chief Executive Officer s Statement 10 Director s Report 14 Independent Auditor s Report 17 Statement of Profit or Loss & Other Comprehensive Income 19 Statement of Financial Position 20 Statement of Changes in Equity 21 Statement of Cash Flows 22 General Information & Summary of Significant Accounting Policies 2339 Notes to the Financial Statements for the year ended 31st December

4 Directors, Officials & Registered Office Directors Opoku Gyamfi Boateng Felix NyarkoPong Kwabena Duffour II(Dr) Owusu Ansah Awere Alexander Gaddiel Buabeng Kofi KyerehDarkwah Nana Boakye AsafuAdjaye Newman Kwadwo Kusi (Prof.) Ben Korley Kakra DuffourNyarko(Mrs) Prof Edwin Ellis Badu Joseph Boye Clottey Chairman Chief Executive Officer Chief Operating Officer Executive Director NonExecutive Director NonExecutive Director NonExecutive Director(Appointed 26/03/14) NonExecutive Director(Appointed 26/03/14) NonExecutive Director NonExecutive Director NonExecutive Director(Resigned 26/03/14) NonExecutive Director(Resigned 26/03/14) Company Secretary Sylvia AssimengArcher (Mrs) Executive Management Felix NyarkoPong Kwabena Duffuor II (Dr.) OwusuAnsah Awere Simeon Tawiah Kwesi Nkrumah Pimpah Clifford Duke Mettle Sylvia AssimengArcher (Mrs.) Ekow Nyarko DadzieDennis John Collins Arthur Elsie Dansoa Kyere (Mrs.) Florence Adei Ohene (Mrs.) Chief Executive Officer Chief Operating Officer Executive Director Technology General Manager Audit General Manager Risk Management & Compliance General Manager Operations Company Secretary Head, Finance and Strategy Head, Treasury Head, Corporate Banking Executive Advisor COO Solicitors Auditors Registered Office Prime Attorneys 14 Awule Nfeni Link Dzorwulu PMB CT 179,Cantonments Accra... Deloitte & Touche Chartered Accountants 4 Liberation Road P.O.Box GP 453 Accra... World Trade Centre (WTC) No. 29, 13th Floor Independence Avenue, Accra P.O.Box AN AccraNorth Bankers Bank of Ghana, One Thorpe Road, P.O.Box GP 2674, Accra, Ghana The Mauritius Commercial Bank Limited, 11th Floor, MCB Head Office 915 Sir William Newton St., Port Loius, Mauritius Citi Bank, N.A. 111 Wall Street, New York BHF Bank Bockenheimer LandStrasse Germany Ghana International Bank, 67 Cheapside Avenue. City of London, EC2V 6AZ Standard Chartered Bank, London. Clement House 27, Clements Lane, London EC4N 7P 1

5 Board Of Directors 1 1. OpokuGyamfi Boateng Chairman Felix NyarkoPong Chief Executive Officer 3. Kwabena Duffuor II (Dr.) Chief Operating Officer 4. Alexander Gaddiel Buabeng NonExecutive Director 5. Kofi KyerehDarkwah NonExecutive Director 6. OwusuAnsah Awere Executive Director Joseph Boye Clottey NonExecutive Director 8. Edwin Ellis Badu (Prof.) NonExecutive Director 9. Ben Korley NonExecutive Director 10. Kakra DuffuorNyarko (Mrs.) NonExecutive Director 11. Sylvia AssimengArcher (Mrs.) Company Secretary

6 Mission, Vision & Values Vision... To be the leading and preferred Bank offering comprehensive financial solutions to our chosen customers (SME and Personal Banking Markets) in a professional, caring, responsive and profitable way. Mission... The Bank s mission is to: Provide the best value for our customers; Create an excellent working environment for our employee development and growth; Enhance shareholder value; Be socially responsive to our communities. Core Values Flexible Minimum bureaucracy Adaptive to changing needs Caring Customer delight Personalised service Vibrant Energetic Ingenious Team Will to win Oneness of purpose Strength 3 unibank (Ghana) Limited

7 Statement of Directors Responsibilities The Directors are responsible for preparing financial statements for each financial year which give a true and fair view of the state of affairs of the Bank at the end of the financial year and the statement of profit or loss and other comprehensive income of the Bank for that year. In preparing those financial statements, the Directors are required to: Select suitable accounting policies and then apply them consistently; Make judgements and estimates that are reasonable and prudent; State whether the applicable accounting standards have been followed; Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the bank will continue in business. The Directors are responsible for ensuring that the Bank keeps accounting records which disclose with reasonable accuracy the financial position of the bank and which enables them to ensure that the financial statements comply with Companies Code 1963 (Act 179), the Banking Act 2004 (Act 673) as amended by Banking (Amendment) Act 2007 (Act 738) and International Financial Reporting Standards. They are responsible for safeguarding the assets of the Bank and hence for taking steps for the prevention and detection of fraud and other irregularities. 4

8 Chairman s Statement We will continuously redefine and embed a strong performance culture which revolves around efficiency and responsibility. OpokuGyamfi Boateng Chairman Introduction Distinguished Shareholders, once again it gives me unmitigated pleasure to welcome you to the Annual General Meeting of your bank, unibank (Ghana) Limited. Today s meeting is the fourteenth Annual General Meeting of your bank and I am honoured to present to you the performance of your bank during the year as reflected in the Bank s Annual Report and Financial Statements for the year ended 31st December, Operating Environment The Ghanaian economy witnessed some growth challenges partly due to global economic challenges and domestic issues. The global economic challenges stemmed from; weaker growth in the United States of America and Latin America, lower than expected growth in Russia due to their geopolitical tensions with Ukraine, less than projected GDP growth in the Euro area, China, Japan, among others. On the domestic front, the country witnessed some instability in the currency as well as challenges in the energy sector (power outages) which had ripple effects on almost every sector of the economy. The under listed macroeconomic indicators aptly summarise the state of the Ghanaian economy: Real GDP in 2014 (including Oil) grew by 6.9% as against 7.6% in 2013 Inflation as at December 2014 was 17% compared to 13.5% at the same period in The cedi suffered its worst depreciation in many years, depreciating by 31.2% against the US Dollar. Money market rates generally went up during the year under review. The 91day and the 182day treasury bill rates increased from 19.2% and 18.7%, respectively, in January 2014 to 5

9 Chairman s Statement 25.8% and 26.4% respectively by December The rate on the 1year note rose to 22.5% in December 2014 from 17.0% in January 2014 The Bank of Ghana policy rate increased from 16% in January 2014 to 21% in November 2014 Average lending rates of the banks rose to 29.0% in December 2014 from 25.6% in December The average rate on 3month term deposits increased to 13.9% in December 2014 from 12.5% in December The Bank s Operations In spite of the unfavourable economic climate, your Bank continued with its strategy of bringing banking services close to the banking public. This was evident in the opening of new branches at not only strategic but convenient places for our cherished customers. During the year, a total of 8 branches were opened to the public. Three of these branches were in Kumasi located at Kejetia, Ahodwo and Old Tafo; four branches are in Accra located at North Industrial Area, Okaishie, Accra Central and East Legon; and one branch at Tema in Community 25. There are also new branches to be completed and will become operational during the year, namely, Cape Coast in the Central Region, Abetifi in the Eastern Region, Asokwa a suburb of Kumasi in the Ashanti Region and Valley View University Campus at Techiman in the BrongAhafo Region. We completed our MasterCard debit card rollout during the year under review with the activation of all our ATMs for MasterCard acceptance. So far, the response from the public has been very encouraging and we shall leverage on this public acceptance to ensure wide usage of the unibank MasterCard. The year also marked an exciting period in the marketing efforts of the Bank as we took full advantage of our sponsorship of the national football team, the Black Stars, to participate actively in the 2014 World Cup staged in Brazil. Our Let s Go Brazil deposit promotion was largely successful, not to mention the gains in our branding and corporate image. A second deposit promotion dubbed Dash for 200k was launched in November While rewarding our loyal customers for their continued patronage of our products and services, the deposits realised through these promotions helped in no small measure to dilute our deposits with low cost funds. During the year, the Bank stepped up work on the implementation of its business continuity strategy by completing all the necessary setups at its disaster recovery site in Tema which will serve as backup for our I.T. and operational systems. I can report, therefore, that our Bank has joined others in the industry with an uptodate and fullyfledged disaster recovery infrastructure. Financial Performance Our operations and financial performance throughout these past years portray us as a bank which is focused on building a solid financial institution. We have been improving on our performance year in and year out and 2014 was no exception. Your Bank recorded Profit Before Tax of 41.3 million which represents 30.50% growth over the 2013 figure of 31.6 million. From Total Assets of 1,299.0 million in 2013, we ended 2014 with 2,147.2 million, an increase of 65.30%. 6

10 Chairman s Statement There was 85.01% growth in customer deposits, from million in 2013 to 1,650.8 million in Loans and Advances portfolio also grew to 1,308.6 million in 2014 representing approximately 58.56% growth over the 2013 figure of million. Appropriations After making a provision of 8.2 million for Corporate Tax, an amount of 33.0 million was transferred to Income Surplus Account. In line with statutory and regulatory requirements, an amount of 16.5 million has been transferred from the Income surplus account to the Statutory Reserve Fund. With the exception of obligations to Preference Shareholders, the Board did not recommend payment of any dividend to the shareholders. Capital Injection I am happy to announce that your Bank s Stated Capital has been increased from 75 million to 120 million. This has been achieved through an injection of 39 million by two of your members and a transfer of 6 million from the Income Surplus to the Stated Capital. This has made your Bank s Stated Capital twice the minimum stated capital of 60 million currently required of banks. We appreciate this gesture from you our shareholders particularly during this challenging period. Recognition unibank did not end the year without being recognised for its unique contribution towards the development of the financial services industry and to the economy as a whole. Your Bank was awarded the 1st runnerup in longterm loan finance and 2nd runnerup in Trade Finance at the 13th Annual Banking Awards organised by Corporate Initiative Ghana. We view these awards as a reflection of the value and appreciation customers place on our product and service. This can only propel us on to greater heights to ensure that the quality of our service delivery does not regress to mediocrity. Corporate Governance It is our responsibility as a Bank, to institute and implement effective controls and monitoring. We recognise the effect that weak governance structures and ineffective internal controls impact on business operations and we have accordingly put in place all the necessary systems to ensure proper corporate governance. We remain committed to the ideals of good corporate governance and all our Committees have conducted their affairs with this in mind. As we open up our operations to more international scrutiny, we shall continue to uphold the virtues of transparency, accountability and utmost good faith in all transactions. Prof. Edwin Ellis Badu and Mr. Joseph Boye Clottey resigned as NonExecutive Board Members. During the year also Nana Boakye AsafuAdjaye and Prof. Newman Kwadwo Kusi were appointed as Directors. They are welcome to the team and we expect them to enhance the Bank s growth with their knowledge and expertise. 7

11 Chairman s Statement Strategic Focus and Outlook for The year 2015 presents another opportunity for the Bank to continue churning out products and services to meet our customers needs and support their businesses. We are going to emphasise on efficient delivery of services across board. Operationally, the Bank will be more responsive to its customers needs than ever with greater utilisation of electronic channels for service delivery. We shall therefore put our technological infrastructure to full use by developing more electronic platforms and channels through which customers can transact their business in utmost comfort and convenience. We intend to replace manual processes with more efficient automated processes to improve on our service delivery and turnaround times. In this regard, we intend to implement an upgrade of our core banking application (Temenos T24) from Release 8 to Release 14. We are positive that this, together with other software installations and upgrades, will propel us towards ensuring operational efficiency and valuebased banking. We will continue with our strategy of getting our services and products closer to our customers and also secure nationwide presence. Accordingly, we will work towards securing at least a branch in the remaining two regions of the country where we do not have presence. In addition, we shall open branches in identifiable strategic locations with business potentials. Admittedly, the human capital of the Bank has been and will continue to form a core element in our Bank s performance. Staff at various levels have consistently exhibited great capacity and dexterity in their duties and the Bank will continue to invest in their training and overall welfare. In 2015, we will continue to measure the performance of staff and duly reward those who exhibit commitment to the Bank s work. We shall also continue to be socially responsive, providing various support and assistance to the society in which we operate. Our strategic objective is to strengthen our partnership with institutions and organisations (both Governmental and NonGovernmental) in education, youth development and health sectors. Eventually, we hope to establish ourselves as key developmental partners in these social sectors. Acknowledgement I will like to extend our appreciation to you the shareholders for your continuous support of the Bank, particularly during these challenging periods. I wish to acknowledge the sacrifices of management and staff in advancing the course of this great Bank. We acknowledge the contributions of other stakeholders, especially our valued customers, for their unrelenting support and custom that have helped in achieving these results. Colleague Directors, it is not out of place to ascribe the successes so far achieved to your unflinching support and collective desire to see this Bank succeed. Please accept my gratitude for the various roles you have played in the unibank we have today. Finally, I would like to thank the Almighty God for His kindness and blessings showered on us. May God bless us all. Thank you. 8

12 Executive Management 1. Felix NyarkoPong Chief Executive Officer 2. Kwabena Duffuor II (Dr.) Chief Operating Officer 3. OwusuAnsah Awere Executive Director Technology 4. Simeon Tawiah General Manager Audit 5. Kwesi Nkrumah Pimpah General Manager Risk Management & Compliance 6. Clifford Duke Mettle General Manager Operations 7. Sylvia AssimengArcher (Mrs.) Company Secretary 8. Ekow Nyarko DadzieDennis Head, Finance and Strategy 9. John Collins Arthur Head, Treasury 10.. Elsie Dansoa Kyere (Mrs.) Head, Corporate Banking 11. Florence Adei Ohene (Mrs.) Executive Advisor COO

13 Chief Executive Officer s Statement We offered quality products and exceptional services to our customers to meet their banking needs. Felix NyarkoPong Chief Executive Officer Overview of 2014 unibank in 2014 operated in a business environment which was characterized by some level of uncertainty as the country struggled to keep most of the main macroeconomic indicators within target. The rate of inflation rose consistently from 13.8% in January, ending the year at 17%. The Bank of Ghana policy rate increased during the year from 16% in January to 21% at the end of the year. Interest rates on domestic assets experienced upward movements. The general investing public therefore responded with a shift from other investment vehicles to riskfree assets. The plan of the Bank is to drive an overall paradigm shift in our way of doing business and in our staff approach to work. We used our branches as shop floors to serve the needs of customers better, and that was largely responsible for our success and business growth in 2014 in spite of the general economic and industry challenges. unibank also experienced its own peculiar situations, the most outstanding been the funding gap, largely a result of liquidity mismatches. This situation led to heavy reliance on tenured funds and the interbank market. unibank, as part of its goal of increasing its market share and improving accessibility, officially commissioned 6 new branches in the first half of the year North Industrial Area, Accra Central, Okaishie and Community 25 in the Greater Accra Region, Tafo and Kejetia in the Ashanti region. In the second half of the year, two additional branches were opened for business at East Legon in Accra and Ahodwo in Kumasi, bringing the total new branches for 2014 to eight. To make our Bank a preferred brand in the industry and also to leverage on our sponsorship of the Black Stars to increase our market share, the Bank ran a deposit promotion dubbed Let s Go Brazil between February and May This promotion was also aimed at parrying the competitive threats 10

14 Chief Executive Officer s Statement and to help in retaining existing customers while at the same time creating opportunities for new customers. Another significant event over the period was the Bank s selection by the Hajj Board as the collecting bank for the 2014 Hajj. This is a relationship we shall do well to preserve for the mutual benefit of the Muslim community and ourselves. Financial Performance Our purpose and focus to maintain continued business momentum continues to yield the desired result as reflected in the Bank s financial performance. The Total Assets increased from 1, 299 million in 2013 to 2,147.2 million by the close of This represents an increase of 65.30%. Besides, the PreTax profit grew by 30.50% from 31.6 million in 2013 to 41.3 million in Loans and advances figure of 1,308.6 million in 2014 grew by 58.56% over 2013 figure of million. Customer deposits also grew by 85.01% from million in 2013 to 1,650.8 million in The summary of the Bank s performance over the past five years is provided in the table and graphs below: All amounts in ' Total Assets 393, , ,131 1,298,970 2,147,156 Total Deposits 307, , , ,285 1,650,796 Loans and Advances 220, , , ,276 1,308,550 Investments 41,870 58, , , ,574 Shareholders' Funds 40,357 50,821 93, , ,852 Profit before Tax 6,832 14,427 21,638 31,638 41,289 Profit after Tax 4,748 10,464 16,476 26,016 33,038 Return on Assets 2.23% 3.01% 2.96% 2.88% 2.40% Return on Equity 15.74% 22.95% 22.77% 21.27% 17.69% Stated Capital 25,030 25,030 60,130 75, ,130 11

15 Chief Executive Officer s Statement TOTAL ASSETS TOTAL DEPOSITS ,147, ,650, ,295, , , , , , , , Loans & Advances Shareholder's Fund ,308, , , , , , , ,357 50,821 93, Profit before Tax Return on Equity 50,000 41,285 25,00% 40,000 31,638 20,00% 30,000 21,638 15,00% 20,000 14,427 10,00% , % %

16 Chief Executive Officer s Statement Strategic Path and Outlook for 2015 Though the financial services industry has become intensely competitive, unibank would be positioned to take advantage of profitable opportunities. The continual patronage of our service by our loyal customers has so far been the bedrock of our success. The strategy of Current Accounts and Savings Accounts (CASA) mobilization to reduce our dependency on Fixed Deposits and improve the liquidity of the bank will be pursued aggressively. To this end, our branch expansion programme will also be pursued to create more mobilization outlets to complement the CASA effort. One of our strategic focus will be to ensure effectiveness and efficiency in our operations by focusing more on eliminating wastage and cutting down on cost so as to serve customers more efficiently. Our desire to return value to shareholders via the attainment of our performance objectives will not be achieved at the expense of customer satisfaction. Our objective will be to offer valuebased banking to our valued customers by offering innovate financial solutions and revamping our esteem banking proposition. We shall continue to rely on technology to deliver value to customers and build a sustainable business that will set us apart from our competitors and enhance shareholders value. We shall therefore leverage on the investments in our technological systems and electronic banking platform. Our Electronic banking department will systematically activate all the functionalities within the twenty Intelligent ATMs deployed to create convenience for our valued customers. Our commitments to our peoples development will continue to be key as we pursue customer service enhancements and increase in productivity. We shall invest in our people through continuous training and development. Our commitment and industry leadership in Social Responsibility activities will be enhanced. We will deepen our sponsorship to the National senior soccer team, the Black Stars, in their tournaments. We will also contribute to Health care delivery by refurbishing and furnishing a 52 bed ward at the Maternity Block of the Korle Bu Teaching Hospital during the first quarter of Appreciation On behalf of management, we congratulate our staff for the extra effort at deposit mobilization. In the face of stiff competition, our customers stood by us and have been our greatest advocate and we thank them for their custom. And to our Board and Shareholders, our gratitude for their direction and advise which has brought us this far. Indeed the Lord is with us Thank you. 13

17 Director s Report In accordance with the requirements of Section 132 of the Companies Code, 1963 (Act 179), the Banking Act of 2004 (Act 673) as amended by Banking (Amendment) Act 2007 (Act 738), we the Board of unibank (Ghana) Limited submit our Annual Report on the state of affairs of the Bank for the year ended 31st December, The Directors in submitting to the shareholders the financial statements of the Bank for the year ended 31st December 2014 reported as follows: 1. Financial Results Net profit before tax Tax Leaving net profit after tax of To which is added Income Suplus at 1st January Transfer to Stated Capital Transfer to Statutory Reserve Transfer to Regulatory Credit Reserve Leaving Income Surplus at 31st December 41,289,179 (8,135,324) 33,153,855 13,441,854 (6,000,000) (16,576,928) (3,965,758) 20,053,023 31,638,367 (5,622,249) 26,016,118 2,927,586 (13,008,059) (2,493,791) 13,441, Dividend No dividend was proposed during the year 3. Directors The Directors who held office during the year were as follows Name Designation OpokuGyamfi Boateng Felix NyarkoPong Kwabena Duffuor II (Dr.) OwusuAnsah Awere Alexander Gaddiel Buabeng Kofi KyerehDarkwah Nana Boakye AsafuAdjaye Newman Kwadwo Kusi (Prof.) Ben Korley Kakra DuffuorNyarko (Mrs.) Chairman Chief Executive Officer Chief Operating Officer Executive Director NonExecutive Director NonExecutive Director NonExecutive Director NonExecutive Director Non Executive Director NonExecutive Director 4. Principal Activities The principal activity of the Bank during the year was in accordance with its regulations; there was no change in the principal activities during the year. 14

18 Director s Report 5. Auditors The Bank s Auditors, Deloitte and Touche, having qualified under Section 134(5) of the Companies Code 1963 (Act 179) as amended have proposed to continue in office. 6. Other Matters The Directors confirm that no matters have arisen since 31st December 2014, which materially affect the financial statements of the Bank for the year ended on that date. Chairman Chief Executive Officer Dated: March 5, Strategic Focus and Outlook for 2015 The Bank will continue with its product development efforts to churn out products and services to meet the needs of its esteemed customers and also to support their businesses. Emphasis will also be placed on efficient delivery of services and utilisation of resources. Operationally, the Bank will be more responsive to its customers than ever with greater utilisation of electronic channels for service delivery. That is to say, we shall put our technological infrastructure to full use by developing more electronic platforms and channels through which customers would transact their business in utmost comfort and convenience. We will continue to deliver excellent customer service through investment in technology. In this regard, we will implement an upgrade of our core banking application (Temenos T24) from Release 8 to Release 14 during the year. This together with other software installations and upgrades would propel us towards ensuring operational efficiency and valuebased banking. We will be focusing more on eliminating wastage and cutting back on costs so as to serve customers more efficiently. Our desire to return good value to shareholders via the attainment of our profit objectives will not be achieved at the expense of customer satisfaction. In this regard, our valued customers should expect nothing but continuous improvement in our service delivery. In line with our objective to become a National Bank and also to get our services to all the 10 regions of Ghana, we shall continue implementing our branch expansion strategy in This will also help us in creating more deposit mobilisation outlets. The human capital of the Bank has been and will continue to form a core element in the Bank s performance. Staff at various levels have consistently exhibited great capacity and dexterity in their functions and the Bank will continue to invest in their training and overall welfare. In 2015, we shall encourage excellence in the performance of our staff and duly reward those who exhibit commitment to the Bank s course. 15

19 unibank Sika Collect

20 Director s Report We shall also continue to be socially responsive, providing various support and assistance to the society in which we operate. Our strategic objective is to strengthen our partnership with institutions and organisations (both Governmental and NonGovernmental) in the education, youth development and health sectors. Eventually, we hope to establish ourselves as key developmental partners in these social sectors. For and Behalf of the Board of Directors Chairman Chief Executive Officer Dated: March 5,

21 Independent Auditor s Report to the Members of unibank (Ghana) Limited Report on the Financial Statements We have audited the financial statements of unibank Ghana Limited which comprise the statement of financial position as at 31st December 2014, the Statement of Profit or Loss and other Comprehensive Income, Statement of Changes in Equity, and Statement of Cash Flows for the year ended, and notes to the Financial Statements, which include a summary of significant accounting policies and other explanatory notes as set out on pages 22 to 74. Directors Responsibility for the Financial Statements The Bank s Directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and in the manner required by the Companies Code, 1963 (Act 179) and the Banking Act 2004 (Act 673), as amended by the Banking (Amendment) Act, 2007 (Act 738); and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements, plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of unibank Ghana Limited at 31st December 2014, and its financial performance and cash flows for the year ended in accordance with International Financial Reporting Standards and in the manner required by the Companies Code, 1963 (Act 179) and the Banking Act 2004 (Act 673), as amended by the Banking (Amendment) Act, 2007 (Act 738). Report on Other Legal and Regulatory Requirements The Ghana Companies Act, 1963 (Act 179) requires that in carrying out our audit work we consider and report on the following matters. 17

22 Independent Auditor s Report to the Members of unibank (Ghana) Limited We confirm that: i. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit, ii. iii. In our opinion proper books of accounts have been kept by the Bank, so far as appears from our examination of those books, and; The Balance Sheet (Statement of Financial Position) and Profit & Loss (Statement of Profit or Loss and other Comprehensive Income) of the Bank are in agreement with the books of accounts. The Banking Act 2004 (Act 673), section 78 (2), requires that we state certain matters in our report We hereby state that: i. The accounts give a true and fair view of the state of affairs of the Bank and its results for the period under review ii. iii. iv. We were able to obtain all the information and explanation required for the efficient performance of our duties as auditors The Bank transactions are within their powers and; The Bank has generally complied with the provisions of Act 673 and the Banking (Amendment) Act of Deloitte & Touche License Number: ICAG/F/129 Chartered Accountants Accra, Ghana Date: March 5, 2015 Felix Nana Sackey Practising Certificate: Licence No. ICAG/P/1131 March 5,

23 Statement of profit or Loss and other Comprehensive Income for the year ended 31st December 2014 Notes Interest Income 2 315,487, ,425,607 Interest Expense 3 (227,117,223) (142,088,427) Net Interest Income 88,370,135 52,337,180 Fees and Commission Income 4 31,311,662 32,273,231 Other Operating Income 5 64,463,994 39,116,093 Operating Income 184,145, ,726,504 Operating Expenses 6 (130,932,884) (87,946,716) Operating Profit before Impairment 53,212,907 35,779,788 Credit Loss Expense 8 (11,923,728) (4,141,421) Profit before Taxation 41,289,179 31,638,367 National Fiscal Stabilization Levy 9c (2,064,459) (736,784) Income Tax Expense 9d (6,070,865) (4,885,465) Profit for the year 33,153,855 26,016,118 Other Comprehensive Income Items that will not be reclassified subsquently to profit or loss: Gain on revaluation of property, net of deferred tax 15,785,535 Total Comprehensive Income for the year 33,153,855 41,801,653 19

24 Statement of Financial Position as at 31st December, 2014 Assets Notes Cash and Balances with Central Bank Government Securities Due from other Banks & Financial Institutions Loans and Advances to Customers Other Assets Current Tax Asset Property, Plant and Equipment Total Assets Liabilities a 15a 117,899, ,574, ,666,780 1,308,549,865 47,114, , ,494,141 2,147,155,952 == 122,074, ,847,465 67,301, ,276,289 33,713,336 94,756,637 1,298,969,773 == Customer Deposits Due to Banks & Other Financial Institution Borrowings Other Liabilities Current Tax Liability Defferred Tax Liability National Fiscal Stabilization Levy Total Liabilities Stated Capital Capital Surplus Statutory Reserve Funds Regulatory Credit Risk Reserve Income Surplus Total Shareholders' Funds Total Liabilities and Shareholders' Funds a 9b 9c 20 21a 21b ,650,795, ,600,650 58,277,515 76,541,901 3,631, ,836 1,924,303, ,129,890 22,620,091 48,115,103 11,934,326 20,053, ,852,433 2,147,155,952 == 892,284, ,715,650 14,856,003 38,651,516 67,863 2,635,080 60,262 1,148,271,195 75,129,890 22,620,091 31,538,175 7,968,568 13,441, ,698,578 1,298,969,773 = These financial statements were approved by the Board of Directors on March 5, 2015 Chairman Director Dated: March 5,

25 Statement of Changes in Equity for the year ended 31st December, 2014 Balance at 1st January,2014 Issue of Shares Total Comprehensive Income Transfer to/(from) Transfer to/(from) Transfer to/(from) Balance at 31st December, Balance at 1 January,2013 Issue of Shares Total Comprehensive Income Transfer to/(from) Transfer to/(from) Balance at 31st December, 2013 Stated Capital ,129,890 39,000,000 6,000, ,129,890 = 60,129,890 15,000,000 75,129,890 = Capital Surplus ,620,091 22,620,091 = 6,834,556 15,785,535 22,620,091 Statutory Reserves ,538,175 16,576,928 48,115,103 = 18,530,116 13,008,059 31,538,175 Regulatory Credit Risk Reserve 000 7,968,568 3,965,758 11,934,326 = 5,474,777 2,493,791 7,968,568 Income Surplus ,441,854 33,153,855 (6,000,000) (16,576,928) (3,965,758) 20,053,023 = 2,927,586 26,016,118 (13,008,059) (2,493,791) 13,441,854 Total ,698,578 39,000,000 33,153, ,852,433 = 93,896,925 15,000,000 41,801, ,698,578 21

26 Statement of Cash Flows for the year ended 31st December, 2014 Cash Flows from Operating Activities Note Net Profit before Tax Adjustment for: Depreciaition Impairment allowance Profit on Disposal of Investment Profit on Disposal of Fixed Assets OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES (Increase)/Decrease in Investments Increase in Loans & Advances Increase in Other Asset Accounts Increase in Customer Deposits Increase/(Decrease) in Borrowings Increase in Interest Payable & Other Liabilities 15a b 41,289,179 7,020,761 11,923,728 (4,066,900) 56,166,768 52,609,869 (495,197,302) (13,401,252) 758,511,047 43,421,513 37,890,385 31,638,367 5,426,811 4,141,421 (50,000) 41,156,599 (85,312,966) (293,172,757) (8,729,286) 198,708,400 (10,192,200) 13,095,890 CASH GENERATED FROM OPERATIONS National Fiscal Stabilisation Levy Corporate Tax Paid NET CASH FROM OPERATING ACTIVITIES 9c 9a 440,001,028 (1,668,885) (5,999,106) 432,333,037 (144,446,320) (796,662) (2,890,022) (148,133,004) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Property, Plant & Equipment Proceeds from sale of Property & Equipment Investments NET CASH USED IN INVESTING ACTIVITIES (81,691,365) 12,000,000 (69,691,365) (30,469,139) 750,000 (29,719,139) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Issuance of Shares NET CASH FROM FINANCING ACTIVITIES NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENT 39,000,000 39,000, ,641,672 15,000,000 15,000,000 (162,852,143) CASH AND CASH EQUIVALENT AT 1 JANUARY CASH AND CASH EQUIVALENT AT 31 DECEMBER 24 14,115, ,757,314 = 176,967,785 14,115,642 Operational Cash flows from interest Interest Paid Interest Received 194,830, ,171, ,706, ,718,079 22

27 General Information & Summary of Significant Accounting Policies a. Corporate Information unibank (Ghana) Limited, a private bank limited by shares, was incorporated and domicile in Ghana under the Companies Code, 1963 (Act 179) and the Banking Act, 2004 (Act 673). The Bank is permitted by its regulations to carry on the business of banking. The address of the registered office of the Bank is No. 581/4 Royalt Castle Road, Kokomlemle, Accra. P O Box, AN 15367, AccraNorth. The financial statements of the Bank for the year ended 31st December, 2014 were approved by the Board of Directors on March 5, b. Statement of Compliance The financial statements have been prepared in accordance with the International Financial Reporting Standards, as issued by the International Accounting Standards Board and the Companies Code 1963 (Act 179). c. Basis of Preparation The financial statements have been prepared on a historical cost basis except for financial instrument measured at fair value and property, plant and equipment that are stated at their fair value. The financial statements are presented in Ghana cedis and all values are rounded to the nearest thousands, except otherwise indicated. d. Use of Estimates and Judgments The preparation of financial statements in conformity with IFRSs requires Management to make judgement, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and the associated assumptions are based on historical experience and other factors that are reasonable under the circumstances, the results of which form the basis of making the judgement about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and the underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Estimates and Assumptions Going Concern The Bank s management has made an assessment of its ability to continue as a going concern and is satisfied that it has the resources to continue in business for the foreseeable future. Furthermore, management is not aware of any material uncertainties that may cast significant doubt upon the Bank s ability to continue as a going concern. Therefore, the financial statements continue to be prepared on the going concern basis. Fair Value of Financial Instrument Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of mathematical models. The inputs to these models are 23

28 General Information & Summary of Significant Accounting Policies derived from observable market data where possible, but if this is not available, judgement is required to establish fair values. Impairment losses on loans and advances The Bank reviews its individually significant loans and advances at each statement of financialposition date to assess whether an impairment loss should be recorded in the income statement. In particular, management s judgement is required in the estimation of the amount and timing of future cash flows when determining the impairment loss. These estimates are based on assumptions about a number of factors and actual results may differ, resulting in future changes to the allowance. Loans and advances that have been assessed individually (and found not to be impaired) are assessed together with all individually insignificant loans and advances in groups of assets with similar risk characteristics. This is to determine whether provision should be made due to incurred loss events for which there is objective evidence, but the effects of which are not yet evident. The impairment loss on loans and advances is disclosed in more detail in Note 13. Deferred Tax Assets Deferred tax assets are recognised in respect of tax losses to the extent that it is probable that future taxable profit will be available against which the losses can be utilised. Judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits, together with future taxplanning strategies. a. Summary of Significant Accounting Policies The significant accounting policies adopted by unibank (Ghana) Limited under the International Financial Reporting Standards (IFRSs) are set out below: i. Interest income and expense For all financial instruments measured at amortised cost, interest income or expense is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or financial liability. The calculation takes into account all contractual terms of the financial instrument (for example, prepayment options) and includes any fees or incremental costs that are directly attributable to the instrument and are an integral part of the EIR, but not future credit losses. The carrying amount of the financial asset or financial liability is adjusted if the Bank revises its estimates of payments or receipts. The adjusted carrying amount is calculated based on the original EIR and the change in carrying amount is recorded as Interest and similar income for financial assets and Interest and similar expense for financial liabilities. ii. Commissions and Fees The Bank earns fee and commission income from a diverse range of services it provides to its customers. Fee income can be divided into the following two categories: 24

29 General Information & Summary of Significant Accounting Policies Fee income earned from services that are provided over a certain period of time Fees earned for the provision of services over a period of time are accrued over that period. These fees include commission income and asset management, custody and other management and advisory fees. Loan commitment fees for loans that are likely to be drawn down and other credit related fees are deferred (together with any incremental costs) and recognised as an adjustment to the EIR on the loan. When it is unlikely that a loan will be drawn down, the loan commitment fees are recognised over the commitment period on a straightline basis. Fee income from providing transaction services Fees arising from negotiating or participating in the negotiation of a transaction for a third party, such as the arrangement of the acquisition of shares or other securities or the purchase or sale of businesses, are recognised on completion of the underlying transaction. Fees or components of fees that are linked to a certain performance are recognised after fulfilling the corresponding criteria. iii. Other Operating Income Other operating income comprises gains or losses arising on fair value changes in trading assets and liabilities, profit or loss on disposal of property, plant and equipment and foreign exchanges differences. iv. Financial Assets and Financial Liabilities Date of Recognition All financial assets and liabilities are initially recognised on the trade date, i.e., the date that the Bank becomes a party to the contractual provisions of the instrument. This includes regular way trades: purchases or sales of financial assets that require delivery of assets within the time frame generally established by regulation or convention in the market place. Categorisation of Ffinancial Assets and Liabilities The Bank classifies its financial assets in the following categories: financial assets held at fair value through profit or loss; loans and receivables and availableforsale financial assets. Financial liabilities are classified as either held at fair value through profit or loss, or at amortised cost. Management determines the categorisation of its financial assets and liabilities at initial recognition. Financial assets and liabilities held at fair value through profit or loss This category has two subcategories: financial assets and liabilities held for trading, and those designated at fair value through profit or loss at inception. A financial asset or liability is classified as trading if acquired principally for the purpose of selling in the short term. Financial assets and liabilities may be designated at fair value through profit or loss when the designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities on a different basis, or a group of financial assets and/or liabilities is managed and its performance evaluated on a fair value basis. 25

30 General Information & Summary of Significant Accounting Policies Loans and Receivables Loans and receivables are nonderivative financial assets with fixed or determinable payments that are not quoted in an active market. They are measured at amortised cost using the effective interest rate. Available for Sale Financial Assets Availableforsale assets are those nonderivative financial assets that are designated as available for sale or are not classified as financial assets at fair value through profit or loss, loans and receivable and held to maturity. They are measured at fair value with changes of the fair value going through equity. Financial liabilities measured at amortised cost This relates to all other liabilities that are not designated at fair value through profit or loss. Initial recognition Purchases and sales of financial assets and liabilities held at fair value through profit or loss, available for sale financial assets and liabilities are recognised on trade date (the date the Bank commits to purchase or sell the asset). Financial assets and liabilities are initially recognised at fair value plus directly attributable transaction cost except for those that are classified as fair value through profit or loss. Subsequent Measurement Available for sale financial assets are subsequently measured at fair value with the resulting changes recognised in equity. The fair value changes on available for sale financial assets are recycled to the income statement when the underlying asset is sold, matured or derecognised. Financial assets and liabilities classified as fair value through profit or loss are subsequently measured at fair value with the resulting changes recognised in income. Loans and receivables and other liabilities are subsequently carried at amortised cost using the effective interest method, less impairment loss. Derecognition Financial assets are derecognised when the right to receive cash flows from the financial assets has expired or where the Bank has transferred substantially all the risks and rewards of ownership. Any interest in the transferred financial assets that is created or retained by the Bank is recognised as a separate asset or liability. Financial liabilities are derecognised when the contractual obligations are discharged, cancelled or expire. Fair Value Measurement The Bank measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements: Level 1: Quoted market price (unadjusted) in an active market for an identical instrument. Level 2: Valuation techniques based on observable inputs, either directly (i.e., as prices) or indirectly (i.e., derived from prices). This category includes instruments valued using quoted market 26

31 General Information & Summary of Significant Accounting Policies prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data. Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments. The determination of fair values of quoted financial assets and financial liabilities in active markets are based on quoted market prices or dealer price quotations. If the market for a financial asset or financial liability is not actively traded, the Bank establishes fair value by using valuation techniques. These techniques include the use of arms length transactions, discounted cash flow analysis, and valuation models and techniques commonly used by market participants. For complex instruments such as swaps, the Bank uses proprietary models, which are usually developed from recognised valuation models. Some or all of the inputs into these models may be derived from market prices or rates or are estimates based on assumptions. The value produced by a model or other valuation technique may be adjusted to allow for a number of factors as appropriate, because valuation techniques cannot appropriately reflect all factors market participants take into account when entering into a transaction. Management believes that these valuation adjustments are necessary and appropriate to fairly state financial instruments carried at fair value on the balance sheet. Reclassification of financial assets For a financial asset reclassified out of the availableforsale category, any previous gain or loss on that asset that has been recognised in equity is amortised to profit or loss over the remaining life of the investment using the EIR. Any difference between the new amortised cost and the expected cash flows is also amortised over the remaining life of the asset using the EIR. If the asset is subsequently determined to be impaired, then the amount recorded in equity is recycled to the profit or loss. Reclassification is at the election of management, and is determined on an instrument by instrument basis. Offsetting Financial assets and liabilities are set off and the net amount presented in the balance sheet when, and only when, the Bank has a legal right to set off the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted by the accounting standards, or for gains and losses arising from a group of similar transactions such as in the Bank s trading activity. 27

32 General Information & Summary of Significant Accounting Policies Amortised cost measurement The amortised cost of a financial asset or liability is the amount at which the financial asset or liability is measured at initial recognition, minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initial amount recognised and the maturity amount, minus any reduction for impairment. Identification and measurement of impairment The Bank assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets are impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after initial recognition of the asset (a loss event ), and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. Objective evidence that financial assets are impaired can include default or delinquency by a borrower, restructuring of a loan and other observable data that suggests adverse changes in the payment status of the borrower. The Bank first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If the Bank determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised, are not included in a collective assessment of impairment. If there is objective evidence that an impairment loss on a loan and receivable has been incurred, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred), discounted at the asset s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the income statement. If a loan and receivable has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the cash flows that may result from foreclosure, less cost for obtaining and selling the collateral, whether or not foreclosure is probable. For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk characteristics (i.e. on the basis of the Bank s grading process which considers asset type, industry, geographical location, collateral type, past due status and other relevant factors). These characteristics are relevant to the estimation of future cash flows for group of such assets being indicative of the debtors ability to pay all amounts due according to the contractual terms of the assets being evaluated. 28

33 General Information & Summary of Significant Accounting Policies Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of historical loss experience for assets with credit risk characteristics similar to those in the Bank. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss experience is based, and to remove the effects of conditions in the historical period that do not exist currently. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor s credit rating), the previously recognised impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognised in the statement of profit or loss and other comprehensive income. Impairment losses on availableforsale financial assets are recognised by transferring the difference between the amortised acquisition cost and current fair value out of equity to the income statement. When a subsequent event causes the impairment loss on an available for sale financial asset to decrease, the impairment loss is reversed through the income statement. However, any subsequent recovery in the fair value of an impaired available for sale financial asset is recognised directly in equity. v. Property, Plant and Equipment Recognition and measurement Items of property and equipment are measured at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of selfconstructed assets includes the cost of materials and direct labour, and any other costs directly attributable to bringing the asset to a working condition for its intended use. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property and equipment have different useful lives, they are accounted for as separate items (major components). An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of assets is the greater of their net selling price and value in use. The impairment losses are recognized in the statement of profit or loss and other comprehensive income. Subsequent Costs The cost of replacing part of an item of property or equipment is recognised in the carrying amount of the item if it is probable that future economic benefits embodied within the part will flow to the Bank and its cost can be measured reliably. The costs of the daytoday servicing of property and equipment are recognised in the statement of profit or loss and other comprehensive income as incurred. 29

34 General Information & Summary of Significant Accounting Policies Depreciation is computed using the straightline method, at the following annual rates: Computer Software 10% Computer Hardware 33.3% Equipment 20% Furniture and Fittings 15% Motor Vehicles 25% Land and Buildings 2% Leasehold Property Over the remaining lease term Repairs and maintenance are charged to the income statement when the expenditure is incurred. Improvements to Property, Plant and Equipment are capitalized. Gains and losses on disposal of Property, Plant and Equipment are determined by reference to their carrying amount and are taken into account in determining net income. vi. Translation of Foreign Currencies The Bank s functional currency is the Ghana Cedi. Transactions in currencies other than Ghana cedis are translated at the interbank foreign exchange rates as quoted by the Association of Bankers Ghana. Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the statement of profit or loss and other comprehensive income. Exchange differences arising on the retranslation of nonmonetary items carried at fair value are included in the statement of profit or loss and other comprehensive income for the period except for differences arising on the retranslation of nonmonetary items in respect of which gains and losses are recognised directly in shareholders equity. For such nonmonetary items, any exchange component of that gain or loss is also recognised directly in the shareholders equity. vii. Reference Rate The transaction rates used are the average of the buying and selling or the underlying interbank foreign exchange rates as quoted by Association of Bankers, Ghana. viii. Cash and Cash Equivalents For the purposes of cash flow statement cash and cash equivalents include cash, nonrestricted balances with Bank of Ghana, amounts due from other banks and financial institutions and short term government securities maturing in three months or less from the date of acquisition. ix. Leases Leases are tested to determine whether the lease is finance or operating lease and treated accordingly. Finance leases leases of property, plant and equipment where the Bank has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at inception of the lease at the lower of the fair value of the lease property, plant and equipment and the present value of minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant periodic rate of interest on the remaining balance of the liability for 30

35 General Information & Summary of Significant Accounting Policies each period. The corresponding rental obligations, net of finance charges, are included on other long term borrowings. The interest element of the finance cost is charged to the income statement over the lease period. The property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset or the lease term. Operating leases leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating lease. Rentals payable under operating leases are charged to income statement on a straight line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into operating lease are also spread on a straightline basis over the lease term. x. Provision Provisions for restructuring costs, legal claims and similar events are recognised when: the Bank has a present legal or constructive obligation as a result of past events; it is more likely that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. xi. Deferred Taxation Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. xii. Current Taxation The Bank provides for corporate taxes at the current tax rates on the taxable profits of the Bank. Current tax is the expected tax payable on the taxable income for the year, using tax rates (and laws) that have been enacted or substantially enacted by the statement of financial position date, and any adjustment to tax payable in respect of previous years. xiii. Dividends on Ordinary Shares Dividends on ordinary shares are recognised on equity in the period in which they are approved by the Bank s shareholders. Dividends for the year that are declared after the statement of financial position date are dealt with in the subsequent events notes. Interim dividends are recognised when paid. xiv. Impairment of NonFinancial Assets The carrying amount of the Bank s nonfinancial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the assets recoverable amount is estimated. 31

36 General Information & Summary of Significant Accounting Policies An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. Impairment losses are recognised in the Profit or Loss and other Comprehensive income. Impairment losses recognised in prior periods are assessed at each reporting date for any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. xv. Employee Benefits ShortTerm benefits Shortterm employee benefits are amounts payable to employees that fall due wholly within twelve months after the end of the period in which the employee renders the related service. The cost of shortterm employee benefits are recognised as an expense in the period when the economic benefit is given, as an employment cost. Unpaid shortterm employee benefits as at the end of the accounting period are recognised as an accrued expense and any shortterm benefit paid in advance are recognised as prepayment to the extent that it will lead to a future cash refund a reduction in future cash payment. Wages and salaries payable to employees are recognised as an expense in the income statement at gross amount. The Bank s contribution to social security fund is also charged as an expense. Pension scheme The bank in compliance to the National Pension Act, 2008 has in place a contributory three tier pension scheme: Tier One a mandatory National Social Security Scheme, managed by the Social Security and National Insurance Trust, under which a 13.5% contribution of employees total emoluments, is made by the bank. Tier Two a fully funded privately managed occupational pension scheme under which employees contribute 5% of their total emoluments Tier Three The Bank has a Provident Fund Scheme for all permanent employees. Employees contribute 5% of their basic salary to the Fund whilst the Bank contributes 5%. The Bank s obligation under the plan is limited to the relevant contribution which is invested at interest rates agreed by the trustees of the scheme and the Bank. Defined benefit gratuity scheme The Company has a defined benefit gratuity scheme for its employees. The company s net obligation in respect of defined benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods and that benefit is discounted to determine its present value. In determining the liability for employee benefits under the defined benefit scheme, consideration is given to future increases in salary rates and the company's 32

37 General Information & Summary of Significant Accounting Policies experience with staff turnover. The recognised liability is determined by an independent actuarial valuation every year using the unit credit method. Actuarial gains and losses arising from differences between the actual and expected out come in the valuation of the obligation are recognised fully in Other Comprehensive Income. The effect of any curtailment is recognised in full in the statement of Comprehensive income immediately the curtailment occurs. The discount rate is the yield on Government of Ghana issued bonds that have maturity dates approximating the terms of The Company s obligation. Although the scheme is not funded, the Company ensures that adequate arrangements are in place to meet its obligations under the scheme. Other longterm employee benefits The company s other longterm employee benefits represents Long Service Awards scheme instituted for all its employees. The company s obligations in respect of these schemes are the amount of future benefits that employees have earned in return for their service in the current and prior periods. The benefit is discounted to determine its present value. The discount rate is the yield at the reporting date on Government of Ghana issued bonds that have maturity dates approximating the term of the company s obligation. The calculation is performed using the Projected Unit Credit method. xvi. Events after the Reporting date The Bank adjusts the amounts recognised in its financial statements to reflect events that provide evidence of conditions that existed at the statement of financial position date. Where there are material events that are indicative of conditions that arose after the statement of financial position date, the Bank discloses, by way of note, the nature of the event and the estimate of its financial effect, or a statement that such an estimate cannot be made. xvii. Financial Guarantees Financial guarantees are contracts that require the Bank to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument. Financial guarantees are initially recognised at their fair value, and the fair value is amortised over the life of the financial guarantee. The financial guarantees are subsequently carried at the higher of the amortised amount and the present value of any expected payment (when a payment under the guarantee has become probable). xviii. Standards and Interpretations effective in the current period The following standards, amendments to the existing standards and interpretations issued by the International Accounting Standards Board are effective for the current period: Amendments to IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosures of Interests in Other Entities and IAS 27 Separate Financial Statements Investment Entities (effective for annual periods beginning on or after 1st January 2014) published by IASB on 31st October The amendments provide an exception to the consolidation requirements in IFRS 10 and require investment entities to measure particular subsidiaries at fair value through profit or loss, rather than 33

38 General Information & Summary of Significant Accounting Policies consolidate them. The amendments also set out disclosure requirements for investment entities. Amendments to IAS 32 Financial instruments: presentation Offsetting Financial Assets and Financial Liabilities (effective for annual periods beginning on or after 1st January 2014) published by IASB on 16th December Amendments provide clarifications on the application of the offsetting rules and focus on four main areas (a) the meaning of currently has a legally enforceable right of setoff ; (b) the application of simultaneous realisation and settlement; (c) the offsetting of collateral amounts; (d) the unit of account for applying the offsetting requirements. Amendments to IAS 36 Impairment of assets Recoverable Amount Disclosures for NonFinancial Assets (effective for annual periods beginning on or after 1st January 2014), published by IASB on 29th May These narrowscope amendments to IAS 36 address the disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal. When developing IFRS 13 Fair Value Measurement, the IASB decided to amend IAS 36 to require disclosures about the recoverable amount of impaired assets. Current amendments clarify the IASB s original intention that the scope of those disclosures is limited to the recoverable amount of impaired assets that is based on fair value less costs of disposal. Amendments to IAS 39 Financial Instruments: Recognition and Measurement Novation of Derivatives and Continuation of Hedge Accounting (effective for annual periods beginning on or after 1st January 2014), published by IASB on 27th June The narrowscope amendments allow hedge accounting to continue in a situation where a derivative, which has been designated as a hedging instrument, is novated to effect clearing with a central counterparty as a result of laws or regulation, if specific conditions are met (in this context, a novation indicates that parties to a contract agree to replace their original counterparty with a new one). IFRIC 21 Levies (effective for annual periods beginning on or after 1st January 2014), published by IASB on 20th May IFRIC 21 is an interpretation of IAS 37 Provisions, Contingent Liabilities and Contingent Assets. IAS 37 sets out criteria for the recognition of a liability, one of which is the requirement for the entity to have a present obligation as a result of a past event (known as an obligating event). The Interpretation clarifies that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy. The adoption of these amendments to the existing standards and interpretations has not led to any changes in the Entity s accounting policies. Standards and Interpretations in issue not yet adopted At the date of authorisation of these financial statements the following standards, amendments to existing standards and interpretations were in issue, but not yet effective: 34

39 General Information & Summary of Significant Accounting Policies IFRS 9 Financial Instruments (effective for annual periods beginning on or after 1st January 2018), issued on 24th July 2014 is the IASB's replacement of IAS 39 Financial Instruments: Recognition and Measurement IFRS 9 includes requirements for recognition and measurement, impairment, derecognition and general hedge accounting. Classification and Measurement IFRS 9 introduces new approach for the classification of financial assets, which is driven by cash flow characteristics and the business model in which an asset is held. This single, principlebased approach replaces existing rulebased requirements under IAS 39. The new model also results in a single impairment model being applied to all financial instruments. Impairment IFRS 9 has introduced a new, expectedloss impairment model that will require more timely recognition of expected credit losses. Specifically, the new Standard requires entities to account for expected credit losses from when financial instruments are first recognised and to recognise full lifetime expected losses on a more timely basis. Hedge accounting IFRS 9 introduces a substantiallyreformed model for hedge accounting, with enhanced disclosures about risk management activity. The new model represents a significant overhaul of hedge accounting that aligns the accounting treatment with risk management activities. Own credit IFRS 9 removes the volatility in profit or loss that was caused by changes in the credit risk of liabilities selected to be measured at fair value. This change in accounting means that gains caused by the deterioration of an entity s own credit risk on such liabilities are no longer recognised in profit or loss. Amendments to IFRS 11 Joint Arrangements Accounting for Acquisitions of Interests in Joint Operations (effective for annual periods beginning on or after 1st January 2016), published by IASB on 12th May IFRS 11 introduces new accounting requirements for joint arrangements, replacing IAS 31 Interests in Joint Ventures. The option to apply the proportional consolidation method when accounting for jointly controlled entities is removed. Additionally, IFRS 11 eliminates jointly controlled assets to now only differentiate between joint operations and joint ventures. A joint operation is a joint arrangement whereby the parties that have joint control have rights to the assets and obligations for the liabilities. A joint venture is a joint arrangement whereby the parties that have joint control have rights to the net assets. IFRS 12 Disclosures of Interests in Other Entities published by IASB on 12th May IFRS 12 will require enhanced disclosures about both consolidated entities and unconsolidated entities in which an entity has involvement. The objective of IFRS 12 is to require information so that financial statement users may evaluate the basis of control, any restrictions on consolidated assets and liabilities, risk exposures arising from involvements with unconsolidated structured entities and noncontrolling interest holders' involvement in the activities of consolidated entities. 35

40 General Information & Summary of Significant Accounting Policies IFRS 14 Regulatory Deferral Accounts (effective for annual periods beginning on or after 1st January 2016), published by IASB on 30th January This Standard is intended to allow entities that are firsttime adopters of IFRS, and that currently recognise regulatory deferral accounts in accordance with their previous GAAP, to continue to do so upon transition to IFRS. IFRS 15 Revenue from Contracts with Customers (effective for annual periods beginning on or after 1st January 2017), published by IASB on 28th May IFRS 15 specifies how and when an IFRS reporter will recognise revenue as well as requiring such entities to provide users of financial statements with more informative, relevant disclosures. The standard supersedes IAS 18 Revenue, IAS 11 Construction Contracts and a number of revenuerelated interpretations. Application of the standard is mandatory for all IFRS reporters and it applies to nearly all contracts with customers: the main exceptions are leases, financial instruments and insurance contracts. The core principle of the new Standard is for companies to recognise revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration (that is, payment) to which the company expects to be entitled in exchange for those goods or services. The new Standard will also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and improve guidance for multipleelement arrangements. Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures Mandatory Effective Date and Transition Disclosures published by IASB on 16th December Amendments defer the mandatory effective date from 1st January 2013 to 1st January The amendments also provide relief from the requirement to restate comparative financial statements for the effect of applying IFRS 9. This relief was originally only available to companies that chose to apply IFRS 9 prior to Instead, additional transition disclosures will be required to help investors understand the effect that the initial application of IFRS 9 has on the classification and measurement of financial instruments. Amendments to IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosures of Interests in Other Entities Transition Guidance published by IASB on 28th June The amendments are intended to provide additional transition relief in IFRS 10, IFRS 11 and IFRS 12, by limiting the requirement to provide adjusted comparative information to only the preceding comparative period. Also, amendments were made to IFRS 11 and IFRS 12 to eliminate the requirement to provide comparative information for periods prior to the immediately preceding period. Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (effective for annual periods beginning on or after 1st January 2016), published by IASB on 11th September

41 General Information & Summary of Significant Accounting Policies The amendments address a conflict between the requirements of IAS 28 and IFRS 10 and clarify that in a transaction involving an associate or joint venture the extent of gain or loss recognition depends on whether the assets sold or contributed constitute a business. Amendments to IFRS 11 Joint Arrangements Accounting for Acquisitions of Interests in Joint Operations published by IASB on 6th May The amendments add new guidance on how to account for the acquisition of an interest in a joint operation that constitutes a business. The amendments specify the appropriate accounting treatment for such acquisitions. Amendments to IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets Clarification of Acceptable Methods of Depreciation and Amortisation (effective for annual periods beginning on or after 1st January 2016), published by IASB on 12th May Amendments clarify that the use of revenuebased methods to calculate the depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset. Amendments also clarify that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. This presumption, however, can be rebutted in certain limited circumstances. Amendments to IAS 16 Property, Plant and Equipment and IAS 41 Agriculture Agriculture: Bearer Plants (effective for annual periods beginning on or after 1st January 2016), published by IASB on 30th June The amendments bring bearer plants, which are used solely to grow produce, into the scope of IAS 16 so that they are accounted for in the same way as property, plant and equipment. Amendments to IAS 19 Employee Benefits Defined Benefit Plans: Employee Contributions (effective for annual periods beginning on or after 1st July 2014), published by IASB on 21st November The narrow scope amendments apply to contributions from employees or third parties to defined benefit plans. The objective of the amendments is to simplify the accounting for contributions that are independent of the number of years of employee service, for example, employee contributions that are calculated according to a fixed percentage of salary. Amendments to IAS 27 Separate Financial Statements Equity Method in Separate Financial Statements (effective for annual periods beginning on or after 1st January 2016), Published by IASB on 12th August The amendments reinstate the equity method as an accounting option for investments in in subsidiaries, joint ventures and associates in an entity's separate financial statements. IAS 27 Separate Financial Statements (revised in 2011) published by IASB on 12th May The requirements relating to separate financial statements are unchanged and are included in the amended IAS 27. The other portions of IAS 27 are replaced by IFRS 10. IAS 28 Investments in Associates and Joint Ventures (revised in 2011) published by IASB on 12th May IAS 28 is amended for conforming changes based on the issuance of IFRS 10, IFRS 11 and IFRS

42 General Information & Summary of Significant Accounting Policies Revised requirements regarding: (i) meaning of effective IFRSs in IFRS 1; (ii) scope of exception for joint ventures; (iii) scope of paragraph 52 in IFRS 13 (portfolio exception) and (iv) clarifying the interrelationship of IFRS 3 and IAS 40 when classifying property as investment property or owneroccupied property. (Amendments are to be applied for annual periods beginning on or after 1st July 2014). Annual Improvements to IFRSs Cycle These improvements are effective from 1st July 2014 and are not expected to have a material impact on the company. They include: IFRS 2 Sharebased Payment This improvement is applied prospectively and clarifies various issues relating to the definitions of performance and service conditions which are vesting conditions, including: A performance condition must contain a service condition A performance target must be met while the counterparty is rendering service A performance target may relate to the operations or activities of an entity, or to those of another entity in the same group A performance condition may be a market or nonmarket condition If the counterparty, regardless of the reason, ceases to provide service during the vesting period, the service condition is not satisfied. IFRS 3 Business Combinations The amendment is applied prospectively and clarifies that all contingent consideration arrangements classified as liabilities (or assets) arising from a business combination should be subsequently measured at fair value through profit or loss whether or not they fall within the scope of IFRS 9 (or IAS 39, as applicable). IFRS 8 Operating Segments The amendments are applied retrospectively and clarify that: An entity must disclose the judgements made by management in applying the aggregation criteria in paragraph 12 of IFRS 8, including a brief description of operating segments that have been aggregated and the economic characteristics (e.g., sales and gross margins) used to assess whether the segments are similar. The reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker, similar to the required disclosure for segment liabilities. IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets The amendment is applied retrospectively and clarifies in IAS 16 and IAS 38 that the asset may be revalued by reference to observable data on either the gross or the net carrying amount. In addition, the accumulated depreciation or amortisation is the difference between the gross and carrying amounts of the asset. IAS 24 Related Party Disclosures The amendment is applied retrospectively and clarifies that a management entity (an entity that provides key management personnel services) is a related party subject to the related party 38

43 General Information & Summary of Significant Accounting Policies disclosures. In addition, an entity that uses a management entity is required to disclose the expenses incurred for management services. Annual improvements Cycle These improvements are effective from 1st July 2014 and are not expected to have a material impact on the company. They include: IFRS 3 Business Combinations The amendment is applied prospectively and clarifies for the scope exceptions within IFRS 3 that: Joint arrangements, not just joint ventures, are outside the scope of IFRS 3 This scope exception applies only to the accounting in the financial statements of the joint arrangement itself. IFRS 13 Fair Value Measurement The amendment is applied prospectively and clarifies that the portfolio exception in IFRS 13 can be applied not only to financial assets and financial liabilities, but also to other contracts within the scope of IFRS 9 (or IAS 39, as applicable). IAS 40 Investment Property The description of ancillary services in IAS 40 differentiates between investment property and owneroccupied property (i.e., property, plant and equipment). The amendment is applied prospectively and clarifies that IFRS 3, and not the description of ancillary services in IAS 40, is used to determine if the transaction is the purchase of an asset or business combination. Annual improvements Cycle These improvements which were done in September 2014 are effective beginning on or after 1st January 2016 and are not expected to have a material impact on the company. They include: IFRS 5 Noncurrent Assets Held for Sale and Discontinued Operations. Adds specific guidance in IFRS 5 for cases in which an entity reclassifies an asset from held for sale to held for distribution or vice versa and cases in which heldfordistribution accounting is discontinued. IFRS 7 Financial Instruments: Disclosures Additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset, and clarification on offsetting disclosures in condensed interim financial statements IAS 19 Employee Benefits. Clarify that the high quality corporate bonds used in estimating the discount rate for postemployment benefits should be denominated in the same currency as the benefits to be paid. IAS 34 Interim Financial Reporting Clarify the meaning of 'elsewhere in the interim report' and require a crossreference The Entity has elected not to adopt these standards, revisions and interpretations in advance of their effective dates. The Entity anticipates that the adoption of these standards, revisions and interpretations will have no material impact on the financial statements of the Entity in the period of initial application. 39

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45 Notes to the Financial Statements for the year 31st December Interest Income Classification: Loans and Advances Placement and special deposits Investment securities No interest has been accrued on impaired loans for the year 2014 (2013: NIL) 256,839,753 13,525,773 45,121, ,487,358 == 168,149,554 1,950,831 24,325, ,425, Interest Expense Current account Time and other deposits Borrowings 7,710, ,081,384 78,324, ,117,223 = 3,748, ,653,693 16,686, ,088,427 == 4. Commission & Fees Foreign transfers & LCs Loan processing fees Commission on turnover Commission on clearing Other commissions 10,361,583 15,895, , ,556 4,083,737 31,311,662 = 9,072,159 15,169,248 4,189,924 35,264 3,806,636 32,273, Other Operating Income Foreign trading Revaluation Gain/(Loss) Profit on disposal of financial assets 52,813,212 7,583,882 4,066,900 64,463,994 38,156, ,192 50,000 39,116,093 = 40

46 Notes to the Financial Statements for the year 31st December Operating Expenses Staff cost Note 7 Advertising & Marketing Administrative Expenses Depreciation Directors' Emoluments: Executive Nonexecutive Auditors' Remuneration Rent 7. Staff Cost 37,082,068 16,850,137 62,240,005 7,020, , , ,000 6,251, ,932,884 24,569,578 10,260,313 42,385,705 5,426,809 1,113, , ,000 3,658,963 87,946,716 Staff Salaries & Allowance Social Security Cost Others 29,511,289 3,035,746 4,535,033 37,082,068 20,016,607 2,019,686 2,533,285 24,569, Credit Loss Expense Specific Impairment Charges Portfolio Impairment Charges 10,413,896 1,509,832 11,923,728 3,852, ,689 4,141,421 41

47 Notes to the Financial Statements for the year 31st December Taxation a. Current Tax Balance at 1st January Adjustment Charge for the year Payments Balance at 31st December b. Deferred Tax Balance at 1 January Charged to profit or loss Charged to equity Balance at 31st December 67,863 5,074,200 (5,999,106) (857,043) 2,635, ,665 3,631,745 (2,775,806) 844,008 4,889,683 (2,890,022) 67,863 ======= 819,261 (4,218) 1,820,037 2,635,080 Recognised deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following: Assets Liabilities 2014 Net Assets Liabilities 2013 Net Property and equipment Portfolio impairment Revaluation 888, ,181 ======= (4,519,926) (4,519,926) (4,519,926) 888,181 (3,631,745) 72,172 72,172 ====== (887,215) (1,820,037) (2,707,252) ======= (887,215) 72,172 (1,820,037) (2,635,080) c. National Fiscal Stabilization Levy Balance at 1st January Charge for the year Payments Balance at 31st December 60,262 2,064,459 (1,668,885) 455,836 ======= 120, ,784 (796,662) 60,262 ====== d. Income Tax Expense Current Tax Deferred Tax 9a 9b 5,074, ,665 6,070,865 4,889,683 (4,218) 4,885,465 42

48 Notes to the Financial Statements for the year 31st December e. Tax Rate Reconciliation The tax on the profit before tax differs from the theoretical amount that would arise using the statutory income tax rate applicable profit as follow: Profit before income tax Tax at applicable tax rate at 25% Tax effect of nondeductible expenses Tax effect of nonchargeable income Tax effect of allowable expenditure Tax effect on capital allowance Origination/reversal of temporary Effective tax rate 10. Cash and balances with Central Bank Cash on hand Balances with Bank of Ghana 11. Government Securities Opening Balance Additions Disposals Closing Balance These are fixed rate Government of Ghana securities maturing between 2013 and The average rate of return on these instruments is 19.49%. 12. Due from other banks and financial institutions Nostro Account Balances Interbank Market Items in Course of Collection 41,289,181 = 10,322,295 1,841,205 (3,912,711) (1,165,541) (739,294) (275,089) 6,070,865 15% 23,639,083 94,260, ,899,220 = 155,847, ,726, ,574,316 = 12,101, ,377,827 14,187, ,666,780 = 31,638,368 = 7,909,592 2,392,057 (2,638,937) (1,072,153) (1,700,876) (4,218) 4,885,465 ======= 15% 26,639,555 95,435, ,074,574 = 116,835, ,607,233 (311,595,027) 155,847,465 7,779,244 34,612,281 24,909,947 67,301,472 = Items in course of collection are cheques or similar instrument drawn on banks and other financial institutions which are yet to be cleared. 43

49 Notes to the Financial Statements for the year 31st December Loans and advances to customers Analysis by type Overdrafts Term Loans Gross Loans & Advances Impairment Allowance Net Loans & Advances Analysis by Business segment Agriculture, Forestry and Fishing Mining and Quarrying Manufacturing Construction Electricity, Gas and Water Commerce and Finance Transport, storage and communication Services Miscellaneous Analysis by type of customers Individuals Private Enterprises Staff 470,735, ,601,399 1,331,336,715 (22,786,850) 1,308,549,865 = 3,519,583 34,552,534 32,085, ,202, ,896, ,496, ,702, ,048, ,834,279 1,331,336,715 == 315,858, ,502,436 26,975,668 1,331,336,715 = 303,827, ,312, ,139,411 (10,863,122) 825,276,289 == 3,855,028 12,921,361 38,009, ,785, ,360, ,298, ,840, ,069, ,139,411 == 102,599, ,694,742 22,845, ,139,411 == a. Movement in Bank's provisions for impairment are as follows: Balance brought forward Impairment (Note 8) 10,863,122 11,923,728 22,786,850 6,721,701 4,141,421 10,863,122 == 44

50 Notes to the Financial Statements for the year 31st December Other Assets Stocks Interest receivables Deposits and prepaid expenses Others (Note 14a) 277,328 32,628,258 5,304,823 8,904,178 47,114, ,586 20,312,401 7,352,416 5,931,933 33,713,336 a. Analysis of others Sundry debtors Security Deposit Mastercard Deposit for Asset Suspense Accounts Canafri Money Transfer Coinstar Money Transfer Express Funds Inwards Remittances unisecurities Assets Tribeca Assets Ghana Leasing company limited ATM Facility charges Connett InterBranch Accounts Small World Money Transfer RIA Money Transfer Biometric Passport Forms 1,368, ,013 3,537,110 1,358, ,545 1,015,147 88, ,467 56,905 65,630 36,499 8,904, , ,310 2,363,468 17, ,684 1,106, ,703 23,331 1,015,147 22,244 16,883 5,931,933 45

51 Notes to the Financial Statements for the year 31st December a. Property, Plant and Equipment Cost/Revaluation Balance at 1st January, 2014 Additions during the year Disposals Transfers Balance as at 31st December, 2014 Depreciation Balance at 1 January, 2014 Disposals Charge for the year Balance as at 31st December, 2014 NBV as at 31st December, 2014 Freehold Land & Buildings 21,804, ,247 22,029, , , ,039 21,486,349 Leasehold Land & Buildings 44,941,670 10,268,399 26,219,255 81,429,324 3,606,496 2,351,753 5,958,249 75,471,075 Computer Software 3,850, ,858 4,347,568 ======= 1,230, ,544 1,632,750 2,714,818 ======= Computers 3,282,919 1,093,563 (1,382,915) 2,993, ,004 (842,331) 885, ,301 2,045,266 ======= Equipment 6,610,806 10,091,965 (5,237,603) 133,097 11,598,265 ======= 1,952,234 (2,044,563) 1,397,052 1,304,723 10,293,542 ======= Furniture & Fittings 7,303,139 1,216,358 (5,390,726) 320,705 3,449,476 1,149,141 (1,191,250) 554, ,089 2,937,387 ======= Motor Vehicles 2,970,380 2,919,697 5,890,077 ======= 1,049,531 1,029,453 2,078,984 3,811,093 ======= Work in Progress 14,028,390 55,604,525 (26,898,304) 42,734,611 42,734,611 Total 104,792,155 81,691,365 (12,011,244) 174,472,276 10,035,518 (4,078,144) 7,020,761 12,978, ,494,141 46

52 Notes to the Financial Statements for the year 31st December a. Property, Plant and Equipment Cost Balance at 1st January, 2013 Additions during the year Revaluation Writeoffs Transfers Balance as at 31st December, 2013 Depreciation Balance at 1st January, 2013 Writeoffs Charge for the year Balance as at 31st December, 2013 NBV as at 31st December, 2013 Freehold Land & Buildings 9,662, ,303 10,929,522 (500,289) 855,487 21,804, ,745 (500,289) 249, ,906 21,661,235 Leasehold Land & Buildings 27,313,312 7,338,263 6,676,050 (1,295,965) 4,910,010 44,941,670 2,975,481 (1,295,964) 1,926,979 3,606,496 41,335,174 Computer Software 2,482,143 1,226, ,117 3,850, , ,974 1,230,206 2,620,504 ======= Computers 900,406 2,382,513 3,282, , , ,004 2,377,915 ======= Equipment 3,724,788 2,777, ,726 6,610, ,078 1,049,156 1,952,234 4,658,572 ======= Furniture & Fittings 3,018,027 2,523,721 1,761,371 7,303, , ,408 1,149,141 6,153,978 ======= Motor Vehicles 1,644,240 1,332,607 (6,467) 2,970, ,076 (6,470) 578,925 1,049,531 1,920,849 ======= Work in Progress 9,775,131 12,030,990 (7,777,731) 14,028,390 14,028,390 ======= Total 58,520,165 30,469,139 17,605,572 (1,802,721) 104,792,155 6,411,430 (1,802,723) 5,426,811 10,035,518 94,756,637 47

53 Notes to the Financial Statements for the year 31st December b Profit on Disposal Proceeds Carrying Amount Profit on Disposal 12,000,000 (7,933,100) 4,066,900 Finance leases The carrying value of property, plant and equipment held under finance lease contracts at 31st December 2014 was Nil (2013: 7,522, 950) Customers Deposit Current accounts Time deposit Savings deposit Analysis by type of Depositors Financial Institutions Individuals and other Private Enterprises Public Enterprises Ratio of 20 largest depositors total deposits 17. Due to Banks and other Financial Institutions Interbank market The interbank market are borowings from other banks which attracts an average interest rate of 22.10%. 18. Borrowings Commercial paper issue Managed Fund Finance lease obligation (Note 18b) GIB loan Shelter Afrique a. Analysis of Borrowings Due within one year Due after one year 504,676,689 1,040,425, ,693,336 1,650,795,872 = 229,625,922 1,107,721, ,448,092 1,650,795,872 == ,600,650 13,400,000 76,815 24,000,375 20,800,325 58,277,515 35,877,165 22,400,350 58,277, ,418, ,843,813 83,022, ,284, ,798, ,006, ,479, ,284,821 = ,715,650 = 6,800,000 86,815 4,366,605 3,602,583 14,856,003 14,856,003 14,856,003 48

54 Notes to the Financial Statements for the year 31st December 2014 Terms and conditions of the GIB and Shelter Afrique Loans: These were loan facilities of US$10 million at a rate of 6% which will mature on 31st December 2015 and US$10 million at a rate of 6.5% which will mature on 31st December 2016 from Ghana International Bank and Shelter Afrique respectively. None of the bank assets was used to secure these loans. The bank has not had any default of principal, interest or other breaches with regard to any of the bank's liabilities. Finance lease The company has finance leases contracts for various items of plant and machinery. These leases have terms of renewal, but no purchase options and escalation clauses. Renewal are the options of the specific entity that holds the lease. Future minimum lease payments under finance contracts together with the present value of the net minimum lease payment are as follows: Minimum Payments 2014 Present Value of Payments 2013 Present Value of Payments Within one year Total minimum lease payments Less amounts representing finance charges Present value of minimum lease payments 5,079,768 (713,163) 4,366, Other Liabilities Interest payable Payment orders Banker's payments Margin account Other creditors and accruals(19a) Deferred Income Loan Processing Fee 59,357,180 4,893,618 27,171 1,134,027 8,194,641 2,935,264 76,541,901 27,070,429 3,771,246 11, ,884 7,515,750 38,651,516 = 19a. Included in other creditors and accruals is the obligation for the company's long service scheme.the Actuarial valuation of the present value of the defined benefit obligation were carried out at 31st December 2014 by Mr. Isaac Senior Damptey, ACIA, ASA, ACA. The present value of the defined benefit obligation and the related service cost were measured using the projected unit credit method. The principal assumptions used for the purposes of the actuarial valuations were as follows; 49

55 Notes to the Financial Statements for the year 31st December 2014 Mortality: Salary Scale: The RP 2000 Mortality Table Salaries are assumed to increase at an annual average rate of10%. Inflation Rate: An average inflation rate of 11.5%. Discount Rate: A discount rate of 14.5%. Asset Return/ Investment Yield: An investment yield rate of 22.5%. Turnover Rate: A turnover rate of 5% is assumed Retirement Age: Retirement age is set at age 60 Principal Results of Valuation Pension cost charged to profit or loss Remeasurement gains/(losses) in other comprehensive income 1Jan Service Net Sub Benefits Return on Actuarial Actuarial Experience Sub Contri 31Dec 2014 cost interest total paid plan assets changes changes adjustments total butions 2014 expense included (excluding arising from arising included by in profit amounts changes in from in OCI employer or loss included in demographic changes net interest assumptions in financial expense) assumptions 319,063 86,589 46, ,853 ( 28,000) 423,916 The following table below illustrates the impact of key economic assumptions on the results as at 31st December Sensitivity Analysis Discount Rate 14.50% 13.05% 15.95% 14.50% 14.50% Salary Increase 10.00% 10.00% 10.00% 9.00% 11.00% Defined Benefit Obligation 423, , , , ,916 Current Service Cost 423, , , , ,916 as % of Monthly Salaries 1.2% 1.2% 1.2% 1.2% 1.2% Number of Employees Monthly Basic Salaries () 1,990,028 1,990,028 1,990,028 1,990,028 1,990,028 50

56 Notes to the Financial Statements for the year 31st December Stated Capital No. of Shares Value No. of Shares Value Authorised Shares of no par value Issued and fully paid: 100,000, ,000,000 Ordinary Shares: Issued for Cash Consideration 46,086,168 86,919,503 29,836,168 47,919,503 Issued for Consideration other than cash Transfer from Income Surplus 2,245,352 7,506,702 55,838,222 2,245,352 15,965, ,129,890 2,245,352 5,006,702 37,088,222 2,245,352 9,965,035 60,129,890 Preference Shares Issued for Cash Consideration ,000, ,129, ,000,000 75,129,890 Ordinary Shares issued for Consideration other than cash are equity injections in the form of Landed Properties with values of 206,352, 1,539,000, and 500,000 which were brought in 2001, 2004 and 2008 respectively. Conditions on Preference Shares Preference Shares are noncumulative and irredeemable of no par value issued for a consideration of GH 10, (Ten thousand Ghana cedis) per share. Each preference share shall attract dividend at the rate of 17% per annum. 21a. Capital Surplus This relates to revaluations of the bank's property, plant and equipment Balance at 1st January Revaluation Deferred tax effect 22,620,091 22,620,091 6,834,556 17,605,572 (1,820,037) 22,620,091 51

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58 Notes to the Financial Statements for the year 31st December b. Statutory Reserve Fund This represents the cumulative amounts set aside as a nondistributable reserve from annual net profit after tax in accordance with Section 29 (1) of the Banking Act, 2004 (Act 673) as amended by the Banking (Amendement) Act of 2007, Act (738). The amounts transferred annually range from 12.5% to 50% of net profit after tax. 22. Regulatory Credit Risk Reserve This represents the excess of provision for bad and doubtful debts in respect of loans as per Bank of Ghana guidelines and loan impairment loss provision as per IFRS. 23. Income Surplus This represents the residual of cumulative annual profits that are available for distribution to shareholders. 24. Cash and Cash Equivalents For the purposes of the cash flow statements, cash and cash equivalents comprise balances with less than 91 days maturity from the date of acquisition Cash and balances with central bank (note 10) Government Securities Due from other banks Due to other banks 117,899, ,791, ,666,780 (134,600,650) 415,757, ,074,574 24,455,245 67,301,472 (199,715,650) 14,115, Contingents & Commitments In common with other banks, the bank conducts business involving acceptances, guarantees, performance bonds and indemnities. The majority of these facilities are offset by corresponding obligations to third parties. As at 31st December, 2014 the Bank has contingencies and commitments as follows: Bonds and Guarantees Letters of Credit 8,831, ,172, ,003,851 30,812, ,814, ,626,530 52

59 Notes to the Financial Statements for the year 31st December 2014 Nature of Contigent Liabilites Letters of credit commit the Bank to make payment to third parties, on production of documents, which are subsequently reimbursed by customers. Guarantees are generally written by the Bank to support performance by a customer to third parties. The Bank will only be required to meet these obligations in the event of the customer's default 26. Related Parties a. Advances include the following amounts lent to related parties: Executive directors Nonexecutive directors Officers and other employees Advances to other Connected Parties b. Key management personnel compensation for the period comprised: 287,808 16,034 26,687,860 2,389,093 29,380,795 85, ,833 22,759,790 2,062,028 25,310,160 Shortterm employee benefits 2,095,057 1,964,461 ======= In addition to transactions with key management, the Bank has the following balances due from the following companies; unisecurities Ghana Limited 593,703 53

60 Notes to the Financial Statements for the year 31st December Operating Expenses Staff Cost Salaries Allowances Social security Provident Fund Employees Gratuity Scheme Medical Training National Service Allowance Staff Welfare SubTotal 24,573,836 4,937,453 3,035, , ,916 1,268,674 1,349, , ,697 37,082,068 15,781,849 4,234,758 2,019, , , , , ,675 24,569,578 Other Operating Costs Advertising & Publication Promotion Printing & stationery Lease rental Charges Travel Expenses Fuel and lubricants Subscriptions and Fees Software Maintenance Fees Globus Internet and Swift cost Repairs and Maintenance Insurance Communication expeneses Legal fees Professional Fees Corresponding Bank Charges Other expenses Depreciation Directors' Emoluments Executive Non Executive Audit Fees Rent Office Utilities Repairs and Maintenance Premises EZwich Charges EBanking charges ATM charges Mastercard Expenses SubTotal Total 12,835,604 4,071,092 1,673,571 5,010,801 6,440,376 11,313, ,399 1,093,087 2,334,036 6,796, , ,838 1,427,512 4,119, ,319 14,066,863 7,020, , , ,000 6,251,101 2,999,591 1,407,428 49, , , ,213 93,850, ,932,884 7,701,015 2,570,283 1,192,099 3,502,098 4,662,568 6,596, ,931 1,116,802 1,264,071 3,364, , , ,730 3,622, ,189 12,577,131 5,426,809 1,113, , ,000 3,658,963 1,599, ,231 12,547 73, ,636 63,377,135 87,946,713 54

61 Financial Risk Management i. Introduction and Overview The types and degree of financial risk organizations may be exposed to depend largely on the size and complexity of business activities. However, unibank is generally exposed to credit, market, liquidity, operational, compliance, legal, regulatory and reputational risks. The Bank s risk management framework, objectives, policies, procedures and processes for identifying, measuring, monitoring and controlling these risks, and regulatory capital management is presented below: Risk Management Framework The Board of Directors and Senior Management have developed and established policies and procedures to facilitate effective risk management. These policies and procedures provide guidance on risk appetite/tolerance limit, risk identification, monitoring and controlling and adherence to the set risk limits. The risk management policies and procedures are reviewed periodically to reflect changes in economic and financial landscape as well as products and services offered. The Board of Directors has the overall responsibility for the establishment and oversight of the Bank s risk management framework. The responsibilities of the Board of Directors include; setting out the Bank s overall risk appetite/tolerance limit, ensuring that the Bank s overall risk exposure is maintained at prudent levels and consistent with available capital. They also include; ensuring that Executive Management as well as individuals responsible for Risk Management possess sound expertise and knowledge to accomplish the risk management function and ensuring that appropriate policies and procedures for risk management are in place. The Board of Directors has established Assets and Liability Management Committee (ALCO), Management Credit Committee and Operational Risk Management Committee. Membership of these Committees includes Executive Management and Heads of Departments which report on periodic basis to the Board of Directors. These Committees are responsible for developing, implementing and monitoring of risk policies and strategies approved by the Board. The Board through its subcommittees on Audit and Risk Management monitors compliance with the Bank s risk management strategies, policies and procedures, and periodically reviews the adequacy of the overall risk management framework in relation to the business activities and the risk profile of the Bank. ii. Credit Risk Credit risk arises from the potential that an obligor is either unwilling to perform on an obligation or its ability to perform such obligation is impaired resulting in economic loss to the Bank. Credit risk stems from outright default due to inability or unwillingness of a customer or counterpart to meet commitments in relation to lending, trading settlement and other financial transaction. Losses may also result from reduction in portfolio value due to the actual or perceived deterioration in credit quality. 55

62 Financial Risk Management The Management Credit Committee is responsible for implementation of the credit risk policy/strategy, monitors credit risk on a bankwide basis and ensures compliance with credit limits approved by the Board. To maintain credit discipline, the Credit Risk Management Department is a separate function independent of loan origination function. The Credit Risk Department is responsible for credit policy formulation, credit approval, credit limit setting, monitoring of credit exceptions/exposures and reviewing/monitoring of security documentations. Business strategies, policies and procedures for managing credit risk are determined bankwide with specific policies and procedures being adopted for corporate, small and medium enterprises and consumer loans. The Bank s Credit Risk Rating framework incorporates both business risk and financial risk analysis using both qualitative and quantitative factors/parameters. Among these factors/parameters are industry characteristics, competitive position, management depth, financial condition, and profitability, and capital structure, present and future cash flows. A numerical grading system 18, with 1 being the highest quality are used to quantify the risk associated with each counterparty within the corporate loan portfolio. For the consumer loans, standard application forms are used to process and approve loans. To maintain credit discipline and standards, the credit origination and approval roles are segregated. Managing Problem Credits All facilities 90 days past due (excesses and overdue) or when three loan installment payments are missed are transferred to the Monitoring and Recovery Unit. Monitoring and Recovery Unit manages and collects/regularizes delinquent facilities after unsuccessful remedial effort by the Business Unit. At 360 days past due, where recovery efforts are unsuccessful, the Monitoring and Debt Recovery Unit refers the customer to contractual external collectors (for small facilities, mainly retail and SME s customer s facilities). For large corporate and SME s that are supported by security, Monitoring and Recovery Unit refers the customer to the Bank s Legal Department. Loan Loss Provisioning Loan losses are anticipated and charged against the profit and loss accounts on monthly basis. The balance in the loan loss provision account is always equal to at least the required provisions based on the Bank s current credit risk rating profile. If the loss classifications increase, the balance of the loss provision account is also increased by an additional charge against earnings. In conformity with Bank of Ghana s directives, the minimum provision that are held are as follows: Credit Risk Rating Days Past Due Minimum Provision Required (%) Current OLEM Substandard Doubtful Loss < Over

63 Credit Risk Exposure Maximum Credit exposure At 31st December 2014, the maximum credit risk exposure of the Bank in the event of other parties failing to perform their obligations is detailed below. No account has been taken of any collateral held and the maximum exposure to loss is considered to be the instruments balance sheet carrying amount or, for nonderivative offbalance sheet transactions, their contractual nominal amounts Placements with other Banks Loans and Advances Unsecured Contingent Liabilities and Commitments Set out below is an analysis of various credit exposures. Analysis by credit grade of loans and advances Loans and receivables Impaired loans Individually impaired Allowance for impairment Impaired loans, net of individual provisions There were no loans past due but not impaired Loans neither past due nor impaired Credit grading 18 or equivalent Less: Portfolio impairment provision Total net loans 181,377,827 1,331,336, ,003,851 1,669,718,392 == 41,092,594 (15,369,785) 25,722,809 1,290,244,120 (11,382,822) 1,278,861,298 == 34,612, ,139, ,626,530 1,062,378,222 == 31,629,390 (11,290,406) 20,338, ,510,020 (2,066,506) 802,443,514 = Fair Value of Collateral held The Bank holds collateral against loans and advances to customers in the form of mortgage interests over property, other registered securities over assets, and guarantees. Estimates of fair value are based on the value of collateral assessed at the time of borrowing, and generally are not updated except when a loan is individually assessed as impaired. An estimate of the fair value of collateral and other security enhancements held against financial assets is shown below: Against impaired assets Against past due but not impaired assets 6,209, ,816, ,025,515 == 11,966, ,916, ,883,116 == 57

64 Financial Risk Management Collateral Reposed The bank did not take possession of any asset during the year 2014 (2013 Nil) Commitment and Guarantees The bank's maximum credit risk exposure for commitment and guarantees amounts to 157, 003,851 ( ,608,676 ). iii. Market Risk Market risk is the potential for loss resulting from adverse movement in risk factors such as interest rates, foreign exchange rates, and equity and commodity prices. The Bank s Assets and Liability Committee (ALCO) has oversight of the market risk management. The ALCO defines the standards and methodologies for market risk management and provides a second level control over the operating units. The Bank s Market Risk Unit (under the supervision of the ALCO) is responsible for the management of the Bank s market risk. The Unit provides oversight and guidance on policy setting, limit setting, funding, and currency and counterparty concentrations. The Unit also carries daily analysis (independent of the front office) of the exposures and risk incurred by the Bank and comparison of said exposures and risk with the set limits. Interest Rate Risk In order to quantify the Banks exposures to structural interest rate risk, assets and liabilities with fixed and floating rates are analyzed to identify any gap. Maturities on outstanding positions are determined on the basis of contractual terms governing transactions, model based on historic client behavioral patterns (special saving accounts, early repayments, etc), as well as conventional assumptions relating to certain aggregate (principally shareholders equity and sight deposits). Once the Bank identifies its gap, the variation in the net present value of the fixedrate position corresponding to an immediate parallel shift of 1% in the yield curve is calculated. Also, analyses are performed on scenarios of potential variations in the net interest income. 58

65 Financial Risk Management A change of a 100 basis point in interest rates at the reporting date would have impacted equity and profit or loss by the amounts shown below: st December 2014 Interest income impact Interest expense impact Net impact 7,488,655 (8,414,333) (925,678) ======= (7,488,655) 8,414, ,678 ======= 31st December 2013 Interest income impact Interest expense impact Net impact 100 bp Increase 4,779,360 5,528,240 (748,880) 100 bp Decrease (4,779,360) (5,528,240) 748,880 ====== Liquidity Risk The Bank s liquidity risk management systems comprise two main processes; 1. The assessment of the Bank s financing requirements on the basis of budgets and forecasts in order to plan appropriate funding sources; 2. The analysis of liquidity risk using liquidity crisis scenarios. The risk analysis is conducted for both on and off statement of financial position items according to currency of denomination and residual maturity. The principle here is to list assets and liabilities due dates by maturity. Maturities on outstanding positions are determined on the basis of contractual terms governing transactions, models based on historic client behavioral patterns as well as conventional assumptions relating to certain assets and liabilities. 59

66 Maturity Analyis of Assets & Liabilities as at 31st December 2014 Assets Cash & Balances with Bank of Ghana Government Securities Due from Other Banks & Financial Loans & advances (net) Other assets Current Tax Assets Property, Plant & Equipment Total Assets Liabilites Customer Deposits Due to Other Banks & Financial Institutions Borrowings Other liabilities Deffered Tax National Fiscal Stabilisation Levy Total Liabilities Net Liquidity Gap 0 3 Months 117,899, ,217, ,666, ,234,547 2,427, ,043 1,079,302,140 == 801,415,597 13,400,000 33,038, , ,309,808 == 230,992, Months 45,058, ,071, , ,288,551 = 180,015,638 76,813 13,189, ,281,885 == 30,006, Months 362,327,271 18,729, ,056,615 == 347,878,518 93,000,000 19,220, ,099,376 == (79,042,761) Over 1 Year 5,298, ,916,205 25,799, ,494, ,508,646 == 321,486,119 41,600,650 44,800,700 11,093,236 3,631, ,612,450 == 40,896,196 Total 117,899, ,574, ,666,780 1,308,549,865 47,114, , ,494,141 2,147,155,952 == 1,650,795, ,600,650 58,277,513 76,541,901 3,631, ,838 1,924,303,519 == 222,852,433 60

67 Maturity Analyis of Assets & Liabilities as at 31st December 2014 The table below shows the contractual expiry by maturity of the Bank s contingent liabilities and commitments. Each undrawn loan commitment is included in the time bound containing the earliest date it can be drawn down. For issued financial guarantee contracts, the maximum amount of the guarantee is allocated to the earliest period in which the guarantee could be called On demand Less than 3 Months 3 12 Months Over 12 Months Total Financial guarantees Letters of credit Other commitments and guarantees Total 4,246, ,218,571 = 20,221,850 19,200,300 39,422,150 4,363,130 4,363,130 ======= 28,831, ,172, ,003, On demand Less than 3 Months 3 12 Months Over 12 Months Total Financial guarantees Letters of credit Other commitments and guarantees Total Financing Facilities Amount in US$ Unsecured : Amount used Amount unused Total 9,169,672 9,169,672 GIB 7,500,000 2,500,000 10,000,000 19,743, ,261, ,005,497 1,899,097 18,552,264 20,451,361 Shelter Afrique 6,500,000 3,500,000 10,000,000 30,812, ,814, ,626,530 = 61

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69 Financial Risk Management Foreign Exchange Exposures The Bank quantifies its exposures to structural exchange rate risk by analysing all asset and liabilities denominated in foreign currencies arising from commercial and proprietary trading. The ALCO monitors the structural exchange rate positions and the open position ratios set by the Bank of Ghana and closes out the Bank s position within individually predetermined limits. The Bank always seeks to minimize the impact of fluctuations in strong currencies to its networth by maintaining both the single currency and aggregate net open position ratios within the regulatory and prudential limits. The Bank complied with both the single currency and the aggregate net open position requirements throughout the period. A 5% strengthening of the cedi against the following currencies as at 31st December 2014 would have impacted equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for Sensitivity analysis Effect in cedis Profit/(Loss) 31st December 2014 USD GBP EUR 31st December 2013 USD GBP EUR 419,209 (42,243) (153,324) 659, , ,397 A best case scenario 5% weakening of the Ghana cedi against the above currencies at 31st December would have had the equal but opposite effect on. CONCENTRATION OF ASSETS, LIABILITIES AND OFF BALANCE SHEET ITEMS The Bank takes on exposure to the effects of fluctuations in prevailing foreign currency exchange on its financial position and the cash flows. The table below summarises the Bank s exposure to foreign currency rate risks as at 31st December, 2014 Included in the table are the Bank s assets, liabilities, and off Balance Sheet items at carrying amounts categorised by currency. The amounts stated in the table are the cedi equivalents of foreign currencies. 62

70 Concentration Of Assets, Liabilities & Off Balance Sheet Items As at 31st December 2014 Assets Cash & Balances with Bank of Ghana Government Securities Due from Other banks & Financial Institutions Loans and Advances to Customers Others Assets Total Assets Liabilities Customer Deposits Borrowings Other Liabilities Total Liabilities Net on Balance Sheet Position as at December 2014 Credit Commitments Net on Balance Sheet Position as at December 2013 US Dollar 2,893,685 11,362,764 51,323,494 1,782,734 67,362,677 41,299,673 27,000,000 1,682,653 69,982,326 (2,619,649) 11,676,469 British Pound 1,223, , ,424,536 1,242,849 12,351 1,255, ,336 5,311,807 Euro 1,533, , ,000 2,096,562 1,301,974 4,514 1,306, ,074 4,267,868 Yen Total 5,650,354 12,063,004 51,323,683 1,846,734 70,883,775 == 43,844,496 27,000,000 1,699,518 72,544,014 = (1,660,239) 21,256,144 63

71 Concentration Of Assets, Liabilities & Off Balance Sheet Items Operational Risk Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. It is the risk of loss arising from the potential that inadequate information systems, breaches of internal controls, fraud, technological failure and unforeseen catastrophes may result in unexpected loss or reputational problems. Over the past two years the Bank has developed a thorough and consistent framework and policies to control and actively manage its operational risk. The Bank s framework complies with the Basel Committee s sound practices for the management and supervision of operational risk and Bank of Ghana s requirements. The Bank s Operational Risk Management Committee has oversight of operational risk management. Its main tasks are to define and implement the strategy for controlling operational risks, establish methods of measurement and analysis and encourage the application of best practices in this regard. Risk and Control SelfAssessment (RCSA) methodology for evaluating risks and the control environment has been formally defined. This process is designed to alert the operating units as soon as possible if they are vulnerable to risk so that they can react and reduce potential losses. Accordingly, the risks inherent in each activity are defined in a risk map, and the quality and efficiency of the corresponding prevention and control procedures are verified on regular basis so as to be able to map any residual risk. The Bank has maintained a database of all internal operating losses and key risk indicators. These common databases are used to analyze losses (by event types, cause, activity, etc) and monitor their evolution as well as the proposed corrective action plans. Compliance and Regulatory Risk To comply with Bank of Ghana s directives and international best practice and standards, the Bank established a compliance unit in Specific policies and procedural manuals have been developed to guard against the risk of noncompliance. Preservation of the Bank s interest against antimoney laundering was reinforced and money laundering monitoring tools was deployed to trace large value transactions to help curb the activities of money launderers. In order to strengthen the Bank s effort against money laundering and terrorism financing, employees at the head office and branches received dedicated training on antimoney laundering and counter terrorism financing issues and reporting. Legal Risk The Bank is not dependent on any patent or any industrial, commercial or financial contract. Risks arising out of material litigation matters initiated or likely to be initiated against the Bank are subject to quarterly review. In this regard the Operational Risk and the Legal Departments draw up a report every quarter setting forth these litigations and assess the potential loss if any. These reports are referred to the Board s Risk Committees which give grounded advice on the basis of which Executive Management decides on the reserves amount or its reversal. Reputational Risk The Bank conducts its business in a responsible, professional and transparent way. By offering simplified products and following the necessary legal and regulatory processes, the Bank safeguards 64

72 Concentration Of Assets, Liabilities & Off Balance Sheet Items the interest of its customers as well as its reputation. Furthermore, the Bank maintains close ties with the communities in which it operates by supporting them in various ways. This is aimed at demonstrating our commitment and fostering a long term relationship with our customers and the public at large. We manage our image and reputation in a professional manner. Capital Management The primary objective of the Bank s capital management policy is to ensure that the Bank complies with externally imposed capital requirement by the Bank of Ghana and that the Bank maintains strong credit ratings and healthy capital ratios in order to support its business and maximize shareholders value. The Bank manages its capital structure and makes adjustment to it in the light of changes in economic conditions, business activities and the risk profiles. In order to maintain the desired level of capital, the Bank may vary its dividend policy or issue new shares. The Bank complied with all externally imposed capital requirement throughout the period. Regulatory Disclosure Loan Classification by Status Gross Loans per BOG Classification Performing Loans NonPerforming Loans NPL (%) Capital Adequacy Ratio (CAR) Loan Loss Provision ratio Ratio of 50 Largest (funded and nonfunded) to exposures (funded and nonfunded) 1,348,060,865 1,306,968,271 41,092, % 11.91% 0.038:1 0.45:1 847,569, ,942,973 31,626, % 12.62% 0.029:1 0.46:1 65

73 Segmental Reporting Segmental Reporting Segmental information is presented in respect of the Bank s business segments. The Bank is organised into three main business segments: corporate, SME and consumer. Some of the Bank s corporate costs are managed centrally and standardised basis are used to allocate these costs to the business segments on a reasonable basis. As at 31 December 2014 CORPORATE SME CONSUMER OTHERS TOTAL Interest Income 167,701,783 74,339,611 12,982,805 60,463, ,487,358 Interest Expense (111,341,548) (19,776,914) (9,479,122) (86,519,639) (227,117,223) Net Interest Income 56,360,235 54,562,697 3,503,683 (26,056,480) 88,370,135 NonFunded Income 33,950,517 8,418, ,660 53,045,373 95,775,656 Operating Income 90,310,752 62,980,803 3,865,343 26,988, ,145,791 Operating Expenses (31,964,831) (16,819,164) (1,348,570) (80,800,319) (130,932,884) Profit before Impairment Loss 58,345,921 46,161,639 2,516,773 (53,811,426) 53,212,907 Impairment loss (11,373,556) (276,473) (273,699) (11,923,728) Profit before tax 46,972,365 45,885,166 2,243,074 (53,811,426) 41,289,179 Taxation (3,911,800) (4,141,081) (198,538) (8,251,419) Profit after tax 43,060,565 41,744,085 2,044,536 (53,811,426) 33,037,760 = Cost to Income Ratio (%) 35.4% 26.7% 34.9% 299.4% 71.1% Net Interest Margin (%) 3.58% 13.4% 3.9% 26.4% 4.1% Credit Loss Ratio (%) 1.1% 0.1% 0.6% 0.0% 0.9% Total Assets 1,628,914, ,462,789 73,489,302 89,289,151 2,147,155,952 Total Liabilities 1,460,938, ,140,963 65,910,981 79,312,866 1,924,303,519 Other Segment Items: Depreciation & Amortisation 7,020,761 7,020,761 Capital Expenditure 81,691,530 81,691,530 Loans 1,010,406, ,491,498 45,584,986 54,853,922 1,331,336,715 66

74 Segmental Reporting Segment Revenue reported above represent revenue generated from External Customers. There were no intersegment revenue in the current year 2014 (2013: Nil) The accounting policies of the reportable segments are the same as the Bank. No single customer contributed 10% or more to the Banks revenue for both 2014 and As at 31 December 2013 CORPORATE SME CONSUMER OTHERS TOTAL Interest Income 118,291,625 41,119,052 8,221,392 26,793, ,425,607 Interest Expense (106,910,115) (22,104,950) (4,993,080) (8,080,282) (142,088,427) Net Interest Income 11,381,510 19,014,102 3,228,312 18,713,256 52,337,180 NonFunded Income 24,532,034 7,859, ,548 38,533,777 71,389,324 Operating Income 35,913,544 26,874,067 3,691,860 57,247, ,726,504 Operating Expenses (3,838,131) (8,238,209) (1,417,401) (74,452,975) (87,946,716) Profit before Impairment Loss 32,075,413 18,635,858 2,274,459 (17,205,942) 35,779,788 Impairment loss (3,016,353) (1,001,707) (123,361) (4,141,421) Profit before tax 29,059,060 17,634,151 2,151,098 (17,205,942) 31,638,367 Taxation (3,212,812) (2,143,951) (265,486) (5,622,249) Profit after tax 25,846,248 15,490,200 1,885,612 (17,205,942) 26,016,118 ======= Cost to Income Ratio (%) 10.7% 30.7% 38.4% 130.1% 71.1% Net Interest Margin (%) 1.2% 6.9% 3.0% 29.5% 4.3% Credit Loss Ratio (%) 0.5% 0.5% 0.3% 0.0% 0.5% Total Assets 881,427, ,554,826 66,789,450 67,198,219 1,298,969,773 Total Liabilities 791,927, ,842,273 64,368,215 57,133,475 1,148,271,195 Other Segment Items: 11,429,952 Depreciation & Amortisation 7, ,418,936 5,426,810 Capital Expenditure 53,400 2,300 30,413,438 30,469,138 Loans 563,171, ,373,572 43,663,510 43,930, ,139,411 Corporate Social Responsibility Cost An amount of 2,376,515 (2013:1, 071,564) was spent under the Bank s social responsibility programme in

75 Fair Value Hierarchy Fair Value Hierarchy Fair value measurement The Bank measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements: Level 1 Quoted market price (unadjusted) in an active market for an identical instrument. Level 2 Valuation techniques based on observable inputs vary directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques where allsignificant inputs are directly or indirectly observable from market data. Level 3 Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments. The determination of fair values of quoted financial assets and financial liabilities in active markets are based on quoted market prices or dealer price quotations. If the market for a financial asset or financial liability is not actively traded, the Bank establishes fair value by using valuation techniques. These techniques include the use of arms length transactions, discounted cash flow analysis, and valuation models and techniques commonly used by market participants. Financial Instruments Classification Summary Financial instruments are classified along four recognition principles: held at fair value through profit or loss (comprising trading and designated), availableforsale, heldtomaturity and loans and receivables. These categories of financial instruments have been combined for presentation on the face of the Statement of Financial position. 68

76 Fair Value Hierarchy The Bank s classification of its principal financial assets and liabilities are summarised below: Financial Assets Notes Held to maturity at a mortise cost Loans & Receivable at amortise cost Total Carying Amount Fair Value Cash and balances with Bank of Ghana Government Securities Due from other Banks and Financial Institutions Loans and Advances Other Assets Total as at 31st December 2014 Cash and balances with Bank of Ghana Government Securities Due from other Banks and Financial Institutions Loans and Advances Other Assets Total as at 31st December ,574, ,574, ,847, ,847, ,899, ,666,780 1,308,549,865 47,114,587 1,681,230,452 = 122,074,574 67,301, ,276,289 33,713,336 1,048,365,671 == 117,899, ,574, ,666,780 1,308,549,865 47,114,587 1,984,804,768 = 122,074, ,847,465 67,301, ,276,289 33,713,336 1,204,213,136 == 117,899, ,574, ,666,780 1,308,549,865 47,114,587 1,984,804,768 == 122,074, ,847,465 67,301, ,276,289 33,713,336 1,204,213,136 == Notes Financial Liabilities Measured at Amortised Cost Total Carrying Amount Fair Value Financial Liabilities Customer Deposits Due to other Banks and Financial Institutions Borrowings Other Liabilities Total as at 31st December ,650,795, ,600,650 58,277,515 76,541,901 1,920,215,938 = 1,650,795, ,600,650 58,277,515 76,541,901 1,920,215,938 =,650,795, ,600,650 58,277,515 76,541,901 1,920,215,938 == Customer Deposits Due to other Banks and Financial Institutions Borrowings Other Liabilities Total as at 31st December ,284, ,715,650 14,856,003 38,651,516 1,145,507,990 = 892,284, ,715,650 14,856,003 38,651,516 1,145,507,990 = 892,284, ,715,650 14,856,003 38,651,516 1,145,507,990 = 69

77 Everyone needs a little bit of care to know they are valued and cherished; and this can be seen in the kind words and actions we show others. Beyond our core business of providing banking & financial products and services, our actions show our dedication in supporting the needy, the vulnerable and the deprived in our society through our Corporate Social Responsibility activities. We know that one act of care, goes a long way in transforming lives and making people feel treasured and loved, and so we continue to give back to the society; we continue to make lives better, and we haven t gotten tired of doing that....unibank, Caring for you Refurbished the Korle Teaching Hospital 2nd Floor Maternity Ward 2&3. Supports the Black Stars 4&5. Donating Nissan PickUps to the University of Education,Winneba & the Presbyterian University College, AbetifiER kva generator set to University of Cape Coast 7. Supports The Ghana Navy 8. Supporting the Ghana National Fire Service (GNFS) 9. Supports the Ghana Prison Service 10. Leukaemia Project Foundation Receive Funds 11. Supporting Chief Imam & Annual Ramadan 12. Donating to Orphans in Bolgatanga (Upper East Region) 13. Benefit from UB Accra Psychiatric Hospital 14&15. Donating Motor Cycles to Kwabenya District Police Command

78 HEAD OFFICE unibank (Ghana) Limited World Trade Center Building No. 29 Independence Avenue, Accra P. O. Box AN AccraNorth Tel: Fax: Head Office Annex Branch No 581/4 Royalt Castle Road (Near ATTC, Kokomlemle) P. O. Box AN 15367, AccraNorth Tel: / Fax: / WTC Branch World Trade Center Branch World Trade Center (Ground Floor) No. 29 Independence Avenue, Accra P. O. Box AN 15367, AccraNorth Tel: Fax: Accra Main Branch (Near ATTC) Kokomlemle P. O. Box An 15367, AccraNorth Tel: / / Fax: Tema Branch Tema Community One, Near Meridian Plaza P. O. Box Co1020, Tema Tel: / / Fax: Osu Branch Near The Glory Oil Service Station, Danquah Circle Tel: / Fax: Osu, Oxford Street Branch Osu, Oxford Street Mall Tel: Fax: Spintex Road Branch Near Goil Filling Station, Spintex Road PMB AN 205, AccraNorth Tel: / Fax: Accra Mall Branch Shop Lo4 Accra Mall Shopping Centre PMB 205, AccraNorth Tel: Fax: Kaneshie Branch Near Takoradi Station Kaneshie P. O. Box AN 15367, AccraNorth Tel: Fax: Apenkwa Branch Motorway Extension, Apenkwa P. O. Box AN 15367, AccraNorth Tel: / Fax: Makola Branch Makola Shopping Mall (OPP. Ghana Law School) P. O. Box AN 15367, AccraNorth Tel: / Fax: Ashaiman Branch Old Tanker Yard, Kaketo Ashaiman P. O. Box AN 15367, AccraNorth Tel: / Fax: Kasoa Branch P. O. Box AN 15367, AccraNorth Tel: / / / Fax: GIMPA Branch Ghana Institute of Management & Public Administration Campus P. O. Box AN 15367, AccraNorth Tel: / 7 Fax: North Industrial Area Branch P. O. Box AN 15367, AccraNorth Tel: Fax: KumasiHarper Road Branch House of Excellence Harper Road Adum, Kumasi P. O. Box Ks Tel: Fax: Suame Branch Suame, Kumasi P. O. Box Ks 14954, Kumasi Tel: Fax: Takoradi Branch unibank (Ghana) Limited Former GNTC Building, Market Circle Tel: / / Fax: Kumasi Branch Golden Tulip Hotel Nhyiaso P. O. Box Ks 14954, Kumasi Tel: / Fax: / Roman Hill Branch Roman Hill, Kumasi P. O. Box Ks 14954, Kumasi Tel: / Fax: Rajkumar, Techiman Branch unibank (Ghana) Limited P. O. Box 558, Techiman North, Techiman Tel: / Tafo Branch P. O. Box Ks 14954, Kumasi Tel: Fax: Koforidua Branch KoforiduaAccra Station Complex P. O. Box KF 2238, New Juabeng District Tel: / Fax: Tamale Branch Tamale, Opposite Ola Cathedral Church, Hospital Road, ChangliTamale P. O. Box Tl 317 Tel: Fax: Kasoa Branch Bawjiase road, Kasoa Tel: / / / Fax: Techiman Opposite Abanmu Total Filling Station Tel: / Fax: Darkuman Branch Darkuman Junction inside Tecno building Tel: Fax: / Tamale Branch Opp. Ola Cathedral Church, Hospital Road Changli Tamale Tel: Fax: Bolgatanga Commercial Street Melcom Building Tel: Fax: Kumasi Tafo Opposite Sakasaka Park Tel: Fax: Kumasi Kejetia Behind PZ Building Tel: Fax: Madina Madina Market Road, near the Post Office Tel: / Fax: North Industrial Area Branch North Industrial Area, near Melcom Plus Tel: Fax: Community 25 Branch First Sky Tower Building, Near Kpone Police Barrier Tel: Fax: Okaishie Branch Opposite Rawlings Park; inside old White Chapel Building Tel: Fax: Accra Central Branch Opposite Rawlings Park, inside old White Chapel Building Tel: Fax: East Legon Lagos Avenue, near Media Pharmacy, East Legon Accra Tel: Fax: Ahodwo Branch located within the Version Apricot building, near Atenga junction, Ahodwo Tel: Fax: Cape Coast University of Cape Coast Campus. Located on the second floor of the Department of Hospitality and Tourism Management building adjacent to the CaselyHayford Hall. Tel: / Valley View University Valley View University Campus, Techiman Tel:

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